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| New Dividend Withholding Tax to replace Secondary Tax on Companies As part of the February 2011 Budget speech, Minister of Finance Pravin Gordhan announced that Dividend Withholding Tax (DWT) will come into effect from 01 April 2012. This will replace the current Secondary Tax on Companies (STC). Please read the important information below that will detail the changes and the impact it may have on your investment with us. The difference between DWT and STC The new DWT is a tax placed on investors who receive dividends, whereas STC is a tax payable by the company paying the dividend. The need for the shift from a company-level tax to an investor-level tax is to align South Africa with international tax practice. All South African companies that pay and receive dividends will have to comply with the new legislation by 01 April 2012. Taxable persons/entities Taxable persons and entities include: |
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| Liability for payment of DWT to the South African Revenue Service (SARS) An investor becomes liable for DWT upon the payment of a dividend by:
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| The tax is levied at a rate of 10% of the gross dividend and will be withheld and paid over to SARS on behalf of the investor. The new DWT must be withheld and paid over to SARS by either the company declaring the dividend or a “paying agent” such as a regulated intermediary. Paying agents who are regulated intermediaries Paying agents who are regulated intermediaries include: |
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| Declaration form If the recipient of a dividend is an exempt entity or a foreign investor, as mentioned above, the recipient needs to provide a declaration to the company declaring the dividend or to the regulated intermediary – in your case, this declaration would need to be submitted to FNB Share Investing. A copy of the declaration form and the Tax Guide can be downloaded here. This form will need to be returned to us by no later than one business day before the last day to trade (LDT date). If you are an exempt recipient and we do not receive your declaration one business day before the last day to trade in order to qualify for the dividend (LDT date), we will have no choice but to withhold 10% tax from your dividend. Important information for foreign investors Certain foreign investors may qualify for a reduced withholding tax rate as a result of the application of a Double Taxation Agreement (DTA) between South Africa and the foreign investors’ country of residence. However, in order to qualify for such reduced withholding tax rates, foreign investors may need to own a minimum percentage of shares in the underlying equities. Should you be a foreign investor which may qualify for such reduced withholding tax rates, a reduced withholding tax form should be completed by the beneficial owner of the underlying shares and submitted to us. Also please note that foreign investors will be exempt for DWT on dividends declared by a Non-Resident company listed in South Africa. To qualify, please complete the declaration form by ticking “Par (j)” under the exemption section. It is important that we receive the declaration form one business day before the last day to trade (LDT date), as foreign investors will not know in advance when there will be a dividend declared a Non-Resident company listed in South Africa within the collective investment scheme. Downloading of Dividend Tax Guide and forms Warm Regards, |
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Disclaimer: This document is intended to provide general information regarding the JSE Limited and its affiliates and subsidiaries ("JSE") and its products and services, and is not intended to, nor does it, constitute investment or other professional advice. It is prudent to consult professional advisers before making any investment decision or taking any action which might affect your personal finances or business. All information as set out in this document is provided for information purposes only and no responsibility or liability of any kind or nature, howsoever arising (including in negligence), will be accepted by the JSE, its officers, employees and agents for any errors contained in, or for any loss arising from use of, or reliance on this document. All rights, including copyright, in this document shall vest in the JSE. "JSE" is a trade mark of the JSE. No part of this document may be reproduced or amended without the prior written consent of the JSE. |
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