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Income Tax Act, 1962 (Act 58 of 1962)

Chapter II: The Taxes

Part VIII : Dividends Tax

64G. Withholding of dividends tax by companies declaring and paying dividends

 

 

(1) Subject to subsections (2) and (3), a company that declares and pays a dividend must withhold an amount of dividends tax from that payment calculated as contemplated in section 64E except to the extent that-
(a) the dividend consists of a distribution of an asset in specie; or
(b) the dividend is not subject to the dividends tax by virtue of any STC credit contemplated in section 64J having been applied.

 

(2)        A company must not withhold any dividends tax from the payment of a dividend contemplated in subsection (1) if—

(a)        the person to whom the payment is made has—

(i) by a date determined by the company; or
(ii) if the company did not determine a date as contemplated in subparagraph (i), by the date of payment of the dividend, submitted to the company-
(aa) a declaration by the beneficial owner in such form as may be prescribed by the Commissioner that the dividend is exempt from the dividends tax in terms of section 64F; and
(bb) a written undertaking in such form as may be prescribed by the Commissioner to forthwith inform the company in writing should the circumstances affecting the exemption applicable to the beneficial owner referred to in item (aa) change or the beneficial owner cease to be the beneficial owner;
(b) the beneficial owner forms part of the same group of companies, as defined in section 41, as the company that paid the dividend; or
(c) the payment is made to a regulated intermediary.

 

(3) A company must withhold dividends tax from the payment of a dividend contemplated in subsection (1) at a reduced rate if the person to whom the payment is made has—
(a) by a date determined by the company; or
(b) if the company did not determine a date as contemplated in paragraph (a), by the date of payment of the dividend,

submitted to the company-

(i) a declaration by the beneficial owner in such form as may be prescribed by the Commissioner that the dividend is subject to that reduced rate as a result of the application of an agreement for the avoidance of double taxation; and
(ii) a written undertaking in such form as may be prescribed by the Commissioner to forthwith inform the company in writing should the circumstances affecting the reduced rate applicable to the beneficial owner referred to in subparagraph (i) change or the beneficial owner cease to be the beneficial owner.