Elephants in the wild
South Africa: Dividend Withholding Tax increase
Laurence Field
02/03/2017
Elephants in the wild
The South African Minister of Finance announced in his Budget Speech of 22 February 2017 that the dividends withholding tax (DWT) rate is increased from 15% to 20%.

The increase in rate is effective from 22 February 2017.

The liability for DWT is triggered on payment, not on declaration. The Income Tax Act deems payment to be as follows:

  • For listed shares, a dividend is deemed to be paid on the date it is actually paid.
  • For unlisted shares, a dividend is deemed to be paid on the earlier of the date on which it is paid or the date on which it becomes due and payable.

When a dividend becomes 'due and payable' depends on wording of the resolution passed to approve the dividend. If the resolution for example states that a dividend will be due and payable on a specific date that is the date to be used to determine the DWT rate applicable. If the resolution is silent on the payment date, the dividend becomes due and payable on the date of declaration.

If a dividend on an unlisted share is credited to a shareholder's loan account, it is deemed to be paid as soon as the shareholder may request the repayment of that portion of the loan account. If the shareholder has a debit loan account and the dividend declared is offset against this loan, the date on which the loan account is reduced is the payment date of the dividend.

Prepared by: Crowe Tax Consulting (Gauteng) (Pty) Ltd

Reinette Theart
+27 11 217 8216
reinette.theart@crowehorwath.co.za
Michael J McKinon
+27 11 217 8075
michael.mckinon@crowehorwath.co.za
Horwath Leveton Boner
+27 11 217 8000
info@crowehorwath.co.za

In South Africa, contact

Michael J McKinon
+27 11 217 8075
michael.mckinon@crowehorwath.co.za

Contact us

Laurence Field
Laurence Field
Partner, Corporate Tax
London