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Consider in retrospect: South African Taxes over the last few years

by , 18 February 2015
Several taxes have been introduced in the last few years under the form of withholding taxes. Most of these changes made to the tax system are levied in terms of the Income Tax Act 58 of 1962 (the 'Act').


An explanation has to be made in the sense that, except for the dividends tax, these withholding taxes mainly apply to persons who constitute non-residents for South African tax purposes. On this particular subject,  we present a retrospect of what we consider to be some of the most important withholding taxes applied in the last few years.

Drawing attention to the current tax system, the tax director Magda Snyckers explained that tax residents should also take note since they could have a withholding obligation which may result in them having a secondary tax liability.

1. Withholding tax on disposal of immovable property by a non-resident is one of the taxes applied in the last years.

Thus, from first of September 2007, a withholding tax is levied on the disposal by a non-resident of any immovable property in South Africa in terms of section 35A of the Act. As Snyckers stated for
ensafrica.com, the amount to be withheld is 5% of the amount payable where the seller is a natural person, 7.5% where the seller is a company and 10% where the seller is a trust.

The same source explains that 'the purchaser must withhold the tax and submit a return to the Commissioner within 14 days after the date on which the tax was withheld if the purchaser is a resident, or within 28 days if the purchaser is a non-resident. Should the amount payable be less than R2 million, no withholding tax is levied'.

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2. Secondly, we mention the withholding tax on foreign entertainers and sportspersons. More precisely, a final withholding tax is levied on foreign entertainers and sportspersons in terms of section 47B of the Act at the rate of 15% on amounts received by or accrued to a non-resident in respect of any personal activity exercised in South Africa.

3. A third important assessment refers to the withholding tax on royalties. According to the current laws, a final withholding tax on royalties is levied in terms of section 49B of the Act. It is levied, as the previously mentioned source notes, the rate of 12% of the amount of any royalty (as defined) paid by any person to a non-resident to the extent that it is sourced in South Africa.

Also, Section 9(2) of the Act sets out the various instances when royalties will be deemed to be derived from a source within South Africa. The withholding tax rate was increased to 15% with effect from 1 January 2015.

4. A final withholding tax on interest is due to enter into force on 1 March 2015. The withholding tax on interest will be levied at the rate of 15% in terms of section 50B of the Act on any interest that is paid by any person to or for the benefit of any foreign person to the extent that the amount is sourced in South Africa. Section 9(2)(b) of the Act determines when interest will be deemed to be sourced in South Africa.






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