Organisation : South African Revenue Service (SARS)
Facility Name : Dividends Tax
Country : South Africa
Website : https://www.sars.gov.za/types-of-tax/dividends-tax/
What is SARS Dividends Tax?
Dividends Tax is a tax on shareholders (beneficial owners) when dividends are paid to them, and, under normal circumstances, 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). A dividend is in essence any payment by a company to a shareholder in respect of a share held in that company, excluding the return of contributed tax capital (i.e. consideration received by a company for the issue of shares).
Who Should Pay Dividends Tax?
Dividends Tax is payable by the beneficial owner of the dividend, but is withheld from the dividend payment and paid to SARS by a withholding agent. The person liable for the tax, however, remains ultimately responsible to pay the tax should the withholding agent fail to withhold the correct amount of tax. An exception to this general principle is where a dividend consists of a distribution of an asset in specie, resulting in the liability for the tax falling on the company itself (such as with STC), which means that it may not withhold the tax from the dividend payment.
How Much Will Be Paid?
The rate of Dividends Tax increased from 15% to 20% for any dividend paid on or after 22 February 2017 (irrespective of declaration date), unless an exemption or reduced rate is applicable.
When Should It Be Paid?
Dividends Tax applies to any dividend declared and paid from 1 April 2012 onwards, and the withholding agent (either the company or the regulated intermediary) should pay the tax withheld to SARS on or before the last day of the month following the month in which the dividend was paid. Dividends Tax payments should be accompanied by the submission of both the DTR01 and the DTR02 return. Penalties and interest may be levied for late payments of dividends tax or the late submission of dividends tax returns.
As a shareholder (in either a company that is resident in South Africa or in a foreign company the shares of which are listed at a South African Exchange) you will become liable for the Dividends Tax when a dividend is paid to you. However, the relevant withholding agent will have to withhold and pay the tax to SARS. The withholding agent should also send you the required declaration and undertaking form(s) for completion if you wish to qualify for any of the exemptions or a reduced rate under a DTA (foreign residents only). The completed form must be sent to the withholding agent before it may exempt the dividend payment or withhold at a reduced rate.
Reporting the receipt of exempt dividends:
Before 17 January 2019 both the payment (outflow) side and the exempt receipt (inflow) side had to be reported to SARS. However, as from this date only the payment (outflow) side will have to be reported, in other words, the receipt of exempt dividends no longer need to be reported to SARS.
What is the difference between Dividends Tax and Secondary Tax on Companies?
The main difference lies in who is liable for the tax. Dividends Tax is a tax levied on shareholders when they receive dividends, where as STC was a tax levied on companies on the declaration of dividends. There is no overlap between STC and Dividends Tax. If a dividend was declared before 1 April 2012 (irrespective of actual payment date) it was subject to STC. Only whereas the dividend is declared and paid on or after 1 April 2012 will it be subject to Dividends Tax.