Who pays dividend tax in South Africa? (2024)

Who pays dividend tax in South Africa?

Dividends Tax is a tax on shareholders (beneficial owners) when dividends are paid to them, and, under normal circ*mstances, is withheld from their dividend payment by a withholding agent (either the company paying the dividend or, where a regulated intermediary is involved, by the latter).

Who is exempt from dividends tax in South Africa?

Dividends are tax exempt if the beneficial owner of the dividend is an SA-resident company, SA-retirement fund or other prescribed exempt person.

Do foreign companies pay tax in South Africa?

Non-residents of South Africa are subject to tax on income derived from a source in South Africa. SA branches of foreign companies are not considered to be separate legal entities for tax purposes, and no tax is withheld on transfers of profits to the head office.

Who gets taxed on dividends?

How dividends are taxed depends on your income, filing status and whether the dividend is qualified or nonqualified. Qualified dividends are taxed at 0%, 15% or 20% depending on taxable income and filing status. Nonqualified dividends are taxed as income at rates up to 37%.

Do foreigners pay capital gains tax in South Africa?

Capital Gains Tax (CGT)

Non-residents are only subject to CGT on the following categories of assets: Immovable property or any interest or right of whatever nature of the non-resident individual to or in immovable property situated in South Africa. Examples include a flat, house, farm, or vacant land.

How are dividends taxed South Africa?

Dividends are subject to Dividend Withholding Tax (DWT) in South Africa. The current DWT rate is set at 20%. Generally, it is the responsibility of the company distributing the dividend to deduct and remit the DWT.

How do I avoid paying dividend tax?

You may be able to avoid all income taxes on dividends if your income is low enough to qualify for zero capital gains if you invest in a Roth retirement account or buy dividend stocks in a tax-advantaged education account.

Are foreign dividends taxable in South Africa?

Most foreign dividends received by individuals from foreign companies (shareholding of less than 10% in the foreign company) are taxable at a maximum effective rate of 20%. No deductions are allowed for expenditure to produce foreign dividends.

What income is not taxable in South Africa?

Interest from a South African source, earned by any natural person under 65 years of age, up to R23 800 per annum, and persons 65 and older, up to R34 500 per annum, is exempt from income tax.

How much foreign income is tax free in South Africa?

From 1 March 2020, however, only the first R1. 25 million of foreign employment income that meets the conditions explained below will be exempt from tax. Our estate and tax planning experts remain abreast of the tax planning conditions that affect your long-term wealth.

Do foreigners pay taxes on dividends?

Certain nonresident aliens who are in the U.S. for more than 183 days will be subject to capital gains taxes. Nonresident aliens are subject to a dividend tax rate of 30% on dividends paid out by U.S. companies.

Do I have to pay taxes on dividends?

Dividends can be classified either as ordinary or qualified. Whereas ordinary dividends are taxable as ordinary income, qualified dividends that meet certain requirements are taxed at lower capital gain rates.

How much dividend income is tax free?

Do expats pay taxes in South Africa?

Any foreign employment income earned over and above R1. 25 million will be taxed in South Africa, applying the normal tax tables for that particular year of assessment.

What is the new expat tax law in South Africa?

As of 1 March 2020, South African tax residents living and working abroad are required to pay tax of up to 45% on their foreign employment income, if they earn more than R1. 25 million per year – although they may qualify for some tax relief.

What is the 183 day rule in South Africa?

You qualify as a South African tax resident. You perform employment services outside South Africa on behalf of an employer (it does not matter if the employer is South African or foreign) You spend at least 183 full days physically outside of the borders of South Africa in any 12-month period.

Who pays capital gains tax in South Africa?

CGT applies to individuals, trusts and companies. A resident, as defined in the Income Tax Act 58 of 1962, is liable for CGT on assets located both in and outside South Africa. A non-resident is liable to CGT only on immovable property in South Africa or assets of a “permanent establishment” (branch) in South Africa.

How are dividends paid on shares in South Africa?

Dividends are usually cash payments to shareholders. Companies that pay dividends are usually more stable and established, not like companies still in the rapid growth phase of their life cycles. South African companies normally pay dividends once, and often twice, a year.

What is dividend withholding tax in South Africa for non residents?

A dividend WHT of 20% applies to any dividend paid by a resident company to a non-resident or by a non-resident company to a non-resident where the shares in respect of which the dividends are paid are listed on a South African exchange.

What is the 60 day dividend rule?

A dividend is considered qualified if the shareholder has held a stock for more than 60 days in the 121-day period that began 60 days before the ex-dividend date.2 The ex-dividend date is one market day before the dividend's record date.

Do you pay capital gains after age 65?

This means right now, the law doesn't allow for any exemptions based on your age. Whether you're 65 or 95, seniors must pay capital gains tax where it's due.

What is the 45 day rule for dividends?

The 45-Day Rule requires resident taxpayers to hold shares at risk for at least 45 days (90 days for preference shares, not including the day of acquisition or disposal) in order to be entitled to Franking Credits.

Is there a tax treaty between US and South Africa?

Also transmitted is the report of the Department of State concerning the Convention. This Convention, which generally follows the U.S. model tax treaty, provides maximum rates of tax to be applied to various types of income and protection from double taxation of income.

Do you pay tax on investments in South Africa?

If you own shares in your unit trust portfolio, any local dividends earned on your investment will be taxed at the DWT flat rate of 20%. The company in which you are invested will withhold 20% of the dividends, which will then be paid over to Sars.

How much tax do I pay on interest earned in South Africa?

Individual taxpayers enjoy an annual exemption on all South African interest income they earn, set by SARS every year. This interest exemption has remained unchanged for a number of years and for the 2023 tax year is set at R23 800 for individuals under 65 years old, and R34 500 for individuals 65 years and older.