All news by: Grant Ward

Proposal to Amend Foreign Employment Income Tax Exemption

Currently, if a South African resident is employed and works abroad for more than 183 days of which 60 days are continuous within a 12 month period, the employment income earned is exempt from tax in South Africa. This is commonly called the section 10(1)(o) exemption. Following the Budget announced on 22 February, this is now under attack.

Special Voluntary Disclosure Programme In Respect of Offshore Assets and Income

On 24 February 2016 the National Treasury released a Media Statement announcing a Special Voluntary Disclosure Programme (SVDP). According to the media statement, the purpose of the SVDP is to give non-compliant taxpayers an opportunity to voluntarily disclose offshore assets and income. The Common Reporting Standard (CRS), formally referred to as the Standard for Automatic Exchange of Financial Account Information, is an information standard for the automatic exchange of information (AEoI), developed in the context of the Organisation for Economic Co-operation and Development (OECD). The legal basis for exchange of data is the Convention on Mutual Administrative Assistance in Tax Matters and the idea is based on the USA Foreign Account Tax Compliance Act (FATCA) implementation agreements.

STC CREDIT – USE IT OR LOSE IT

Dividends tax was introduced into the South African tax regime on 1 April 2012 and replaced secondary tax on companies (STC). STC was levied on dividends distributed by companies at the flat rate of ten percent. In terms of the dividends tax regime, a 15% tax is levied on the amount of any dividend paid by a company. The company is liable to withhold the amount of the tax in respect of cash dividends and pay it over to the South African Revenue Service (SARS).

WITHHOLDING TAX ON FOREIGN INTEREST PAID AND INCREASE IN RATE OF WITHHOLDING TAX ON ROYALTIES PAID (EFFECTIVE 1 JANUARY 2015).

Areas that could be of significance to entities that receive finance from abroad, are Sections 50A – 50H that came into effect on 1 January 2015.

These sections deal with withholding tax on interest paid to or for the benefit of any foreign person, to the extent that the amount is regarded as having been received or accrued from a source within South Africa.  According to the new regime, withholding tax amounting to 15% of the interest payable will be required to be withheld and paid by the South African resident entity to SARS by the last business day of the month, following the month in which the interest is paid.