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Budget 2016 – Withdrawal of withholding tax on service fees

The withholding tax on service fees provided for in s51A-s51H of the Income Tax Act was expected to commence on 1 January 2017. In this regard, it was envisaged that the local recipient of services would generally have to withhold 15% of the fee payable to the non-resident service provider, (subject to the application of a relevant international tax treaty).

South Africa signed two new double tax agreements with Kenya and Hong Kong

Readers will note from SARS Watch that a new double taxation agreement between South Africa and Kenya was recently published in the Gazette. Subsequent to this, a further agreement, this time with Hong Kong, was published in the Gazette on 24 November 2015. Both of these agreements come into effect in South Africa as from 1 January 2016. In Kenya, the DTA also takes effect on 1 January 2016, whereas the agreement with Hong Kong will be effective in that jurisdiction from 1 April 2016.

Interest(ing) withholding tax

Author: Michael Reifarth (Tax Executive at ENSafrica). The Taxation Laws Amendment Act of 2015 (“Amendment Act”) was promulgated on 8 January 2016 and contains a number of legislative changes to the Income Tax Act, 58 of 1962 (“the Act”). The Amendment Act contains some long-awaited amendments to the provisions that regulate the interest withholding tax (“IWT”). This article examines two of the more important changes that should be borne in mind by parties affected by the IWT.

‘Interest’ for purposes of Withholding Tax on Interest (WTI)

Author: Lisa Brunton (Cliffe Dekker Hofmeyr). The Taxation Laws Amendment Bill 2015 (Bill) proposes the insertion of a definition for the term ‘interest’ in s50A of the Income Tax Act, No 58 of 1962 (Act) to clarify the meaning of interest for purposes of the WTI. ‘Interest’ is to be defined in s50A of the Act with reference to paragraphs (a) and (b) of the definition of ‘interest’ under s24J(1), meaning that for WTI purposes, ‘interest’ includes “the gross amount of any interest or related finance charges, discount or premium payable or receivable in terms of or in respect of a financial instrument;” or “the amount (or portion thereof) payable by the borrower to a lender in terms of a lending arrangement as represents compensation for any amount which the lender would, but for such lending arrangement, have been entitled”.

Snapshot of new withholding tax on interest (WTI) – Are you liable?

Author: Ilsa Groenewald, Associate Director : Tax,  BDO Durban Johannesburg, 18 May 2015 – High net worth individuals who hold local and foreign investments may not be aware of the new withholding tax on interest (WTI) introduced by SARS. WTI is a tax charged on interest paid on or after 1 March 2015 by any person to or for the benefit of a foreigner from a source within South Africa.

Withholding taxes – Overview of current taxes

Over the past few years we have seen the introduction of various withholding taxes to the South African tax system. We set out below a high-level summary of the various withholding taxes that are levied in terms of the Income Tax Act  No. 58 of 1962 (the Act), their rates and the withholding and reporting obligations. Apart from the dividends tax, these withholding taxes primarily apply to persons that constitute non-residents for South African tax purposes. However, tax residents should also take note since they could have a withholding obligation which may result in them having a secondary tax liability.

Are you liable for new Withholding Tax on interest (WTI)? Snapshot of new Withholding Tax

High net worth individuals who hold local and foreign investments may not be aware of the new withholding tax on interest (WTI) introduced by SARS. WTI is a tax charged on interest paid on or after 1 March 2015 by any person to or for the benefit of a foreigner from a source within South Africa. Ilsa Groenewald, Associate Director for Tax at the Durban office of audit and accounting firm, BDO says “In this new procedure the foreigner will be responsible for the tax, whilst the person making the interest payment will be responsible for withholding the tax.” “The interest paid is taxed at a final tax rate of 15%.” “The return submitted to SARS is called the WTID (Withholding Tax on Interest Declaration) and WTI payments can only be made via the SARS electronic e-filing system.”

An Overview of South Africa’s Withholding Tax Regime

Author: Mansoor Parker (ENSafrica) Venture capital companies are a tax-favoured investment vehicle. The venture capital company (“VCC”) scheme, introduced in 2009, is a tax-based scheme designed to encourage individual and corporate investors to invest in a range of smaller, higher-risk trading companies by investing through the VCCs. Background Although South Africa has a well-developed private equity industry, its appetite for start-up, early stage and seed capital type transactions is low. To meet the challenge of access to venture capital for small and medium-sized enterprises, government introduced a tax incentive for individual investors, corporate investors and venture capital funds in qualifying small enterprises and start-ups. The tax incentive took effect from 1 July 2009.

An Overview of South Africa's Withholding Tax Regime

Author: Mansoor Parker (ENSafrica) Venture capital companies are a tax-favoured investment vehicle. The venture capital company (“VCC”) scheme, introduced in 2009, is a tax-based scheme designed to encourage individual and corporate investors to invest in a range of smaller, higher-risk trading companies by investing through the VCCs. Background Although South Africa has a well-developed private equity industry, its appetite for start-up, early stage and seed capital type transactions is low. To meet the challenge of access to venture capital for small and medium-sized enterprises, government introduced a tax incentive for individual investors, corporate investors and venture capital funds in qualifying small enterprises and start-ups. The tax incentive took effect from 1 July 2009.

Withholding Tax on Interest

SARS recently issued a summary of the Withholding Tax on Interest (WTI) which mainly addresses practical issues relating to WTI. The WTI came into effect on 1 March 2015 (in respect of interest that is paid or that becomes due and payable from that date). We summarise the most salient points further on in this article. The summary is not intended to be comprehensive and does not deal with some of the complex technical issues contained in the WTI provisions.