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Interest is exempt if it's paid or payable for any listed debt.
Interest is exempt from WTI if it's paid or payable by:
· Any bank;
· The South African Government;
· A headquarter company on any financial assistance to a foreign person, but only if it holds at least 10% of the equity share (shared ownership) and voting rights to that foreign person; or
· An authorised user or exchange on funds held in trust (in other words, held by a person who is not the owner but a trustee or agent
). This is under Section 21 (6) of the Financial Markets Act,
if that foreign person is a client as defined within in the Act.
A 'foreign person' can be an individual, a company or a corporation etc.
Interest is exempt from WTI if the foreign person is:
· A natural person who was in South Africa for more than 183 days during the 12 months before the date the interest becomes payable; or
· A registered taxpayer in South Africa and the debt claim, on which the interest is paid, is linked to a permanent organisation in South Africa.
If you want Exemption#3
to apply, you must get a declaration from the foreign person BEFORE the interest is paid.
Any interest on funds which are lent to a bank, and that are linked to any type of loan given to another person by that same bank, will NOT qualify for WTI exemption.
*To understand this cautionary note in more practical terms, and to learn much more on Withholding Tax on Interest, simply page over to chapter W 03
in your Practical Tax Loose Leaf Service
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