New Withholding Tax on Cross-Border Services

Author: Graeme Palmer (Commercial Department of Garlicke & Bousfield Inc) The Income Tax Act, 1962 was recently amended to provide for a new withholding tax on cross-border service fees.  According to the new law, a withholding tax of 15% must be levied on the amount of any service fee that is paid by any person to or for the benefit of any foreign person to the extent that the amount is regarded as having been received by or accrued to the foreign person from a source within South Africa. A foreign person is any person who is not a resident.