- 1 July 2020 – Dividends Tax – Declaration and undertaking validity limited
As from 1 July 2020, the validity of the declaration and undertaking forms submitted to withholding agents could be limited to only five years from the date the declaration was made, and unless a new declaration and undertaking is made the exemption or reduced rate may no longer be applicable. There are exemptions to this limitation, and taxpayers are advised to approach the withholding agent to clarify whether or not a new declaration and undertaking is required.
- 14 August 2018 – Dividends Tax Tables – Summary of DTA rates
An updated summary of the withholding tax rates as per the South African Double Taxation Agreements currently in force (Africa and the rest of the world) was published.
- 09 March 2017 – Dividends Tax – Clarification Document for Dividends Tax – Tax Rate Change
The interpretation notes contained in this document are applicable to the BRS with the title and version SARS_External BRS_2014_Dividends Tax_v2.0.1-6 with the effective date of 1 March 2015. This document is a summary of the legislative change with reference to the increased Tax Rate for submissions due by end March 2017.Note: This Clarification Document is effective for submissions due by end March 2017. SARS Testing platform will be updated from 13 March 2017.
What is Dividends Tax?
- South African tax resident company; or
- Foreign Company whose shares are listed on a South African Exchange.
- align South Africa with the international norm where the recipient of the dividend, not the company paying it, is liable for the tax (South Africa was one of only a few countries with a corporate level tax on dividends, such as STC)
- make South Africa a more attractive destination for international investment by eliminating the perception of a higher corporate tax rate (STC is an extra corporate tax) coupled with lower accounting profits (STC had to be accounted for in the Statement of Comprehensive Income (Income Statement)).
Who should pay it?
How much will be paid?
A summary of the withholding tax rates as per the South African Double Taxation Agreements currently in force has been split into two parts, Africa and the rest of the world. See the two sheets on the Dividends Tax Tables – Summary of DTA rates.
When should it be paid?
What steps must I take?
Top tip: Many withholding agents have incorporated these declaration forms into their account-opening process, so there is no need to do so at a later stage. Should any material aspect of such a declaration change, it is incumbent on the beneficial owner to advise the withholding agent accordingly.
Reporting the receipt of exempt dividends
What is the difference between Dividends Tax and Secondary Tax on Companies?
The main difference lies in who is liable for the tax. Dividends Tax is a tax levied on shareholders when they receive dividends, where as STC was a tax levied on companies on the declaration of dividends. There is no overlap between STC and Dividends Tax. If a dividend was declared before 1 April 2012 (irrespective of actual payment date) it was subject to STC. Only whereas the dividend is declared and paid on or after 1 April 2012 will it be subject to Dividends Tax.
|Modernised 3rd Party Data Documents for Dividends Tax|
|IndustryCommunication-DWT for submissions due end of March 2017|
|Business Requirement Specification (BRS) – Administration of Dividends Tax (version 1.0.0) for submission by end of March 2016|
|Business Requirement Specification (BRS) – Administration of Dividends Tax (version 2.0.1) for submission by end of April 2016|
|Dividends Tax Test file: Dividends Tax File Structure for Testing Purposes|
|Dividends Tax Test file: Dividends Tax Trade Testing – Interpretation Notes|
DIV-easyFile-G001 – A Guide to the Declaration of Dividends Tax via easyFile- External Guide
DT-GEN-01-G02 – Declaration of Dividends Tax via eFiling – External Guide
DT-GEN-01-G03 – A Quick Guide to Dividends Tax – External Guide
GEN-ENR-01-G01 – Guide for the submission of third party data using the connect direct channel – External Guide
GEN-ENR-01-G02 – Guide for Submission of Third Party Data Using the HTTPS Channel – External Guide
IT-AE-36-G02 – Comprehensive Guide to the Income Tax return for Trusts – External Guide
LAPD-Gen-G02 – Guide for Tax Rates Duties Levies
LAPD-Gen-G08 – Guide on the Taxation of Professional Sports Clubs and Players
LAPD-IT-G19 – Comprehensive Guide to Dividends Tax
LAPD-IT-G24 – Guide on Mutual Agreement Procedures
Legal-Pub-Guide-Gen01 – Taxation in South Africa
WTR01 – Return for Withholding Tax on Royalties – External Form
Frequently Asked Questions
FAQ: Who is liable for the Dividends Tax?
The beneficial owner of the dividend is liable for the...Read More
FAQ: What is meant by beneficial owner?
The beneficial owner is the person entitled to the benefit...Read More
FAQ: What is the rate of Dividends Tax?
Dividends tax was introduced at a rate of 15% when...Read More
FAQ: When will Dividends Tax come into effect
Dividends Tax applies to any dividend declared and paid on...Read More