National Treasury
National treasury has confirmed in a notice published in the Government Gazette that the dividends withholding tax is to come into operation on 1 April 2012.
The Taxation Laws Amendment Bill, currently before president Zuma for assent, calls for the replacement of the secondary tax on companies by the dividends withholding tax.
In a presentation on the bill before the standing committee on finance in Parliament in June last year, treasury indicated that the new tax will place a 10% tax on dividends declared and paid by domestic companies.
The tax will also apply to foreign companies listed on the Johannesburg stock exchange (JSE).
Up to now, the secondary tax on companies has imposed tax at 10% on the dividend declared by domestic companies.
The dividends tax makes use of a withholding system where the company paying the dividend withholds the tax on behalf of the shareholders.
This means that the tax liability will shift from the shareholder to the domestic company.
This is to ensure that the tax is paid.
Companies must now pay shareholders the gross dividend minus the withholding tax.
A number of exemptions to the dividends tax will apply.
Dividends will not be subject to the withholding tax if:
• The beneficiary is a resident company
• The beneficiary is the local, provincial or national government
• The dividend is paid to tax exempt beneficiaries
• The dividend is paid by a micro-business (up to R200 000)
• The dividend is paid by a foreign company listed on the JSE to a non-resident beneficiary
Sabinet Cape Town Office
Post new comment