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.
Category: Withholding Tax
Sars has increased powers under the Tax Administration Act
An overview The recently promulgated Tax Administration Act, No. 28 of 2011 (TAA) contains provisions that grant some dramatically increased powers to the South African Revenue Service (Sars). Tax recovery on behalf of foreign governments Section 185 of the TAA contains the measures available to Sars to recover tax on behalf of foreign governments. Broadly defined, the provisions of section 185 provide that revenue authorities of a foreign country (with which South Africa has a tax treaty) can request Sars to assist in the collection of foreign taxes due by a person to that country.
Busting tax fiddles
In recent years international lawyers and accountants have built a web of corporate opacity which has enabled tax avoidance and corruption on an alarming scale. Private financial wealth sitting on tax havens has grown to around US$ 21 trillion, of which $9trillion is from developing countries. Some minuscule jurisdictions, such as the Cayman Islands, have become the legal home to trillions of dollars of corporate assets, offering the unbeatable attractions of zero taxation plus secrecy. Some industries are now dominated by them: half the world’s shipping is registered there.
Shuttleworth takes Reserve Bank to court
Pretoria – Billionaire IT entrepreneur and the first South African in space, Mark Shuttleworth, has turned to the Pretoria High Court in a bid to recover the 10 percent exit levy (more than R250 million) imposed on him by the South African Reserve Bank when he transferred more than R2 billion out of the country. His legal team, headed by Gilbert Marcus SC, on Monday asked Judge Francis Legodi to set aside the decision by the Reserve Bank that he had to pay this amount – and he wants to be refunded.
Withholding taxes – extended to service fees
Taxpayers have been anticipating the introduction of a withholding tax on interest paid to non-residents for a number of years now. The effective date for the commencement of the withholding tax on interest will be further delayed from 1 July 2013 to 1 March 2014. The royalty withholding tax to be imposed at a rate of 15% (which is currently imposed at a rate of 12%) will also be delayed until 1 March 2014.