6.9.1. Royalties

Non-residents not carrying on business in South Africa, who receive royalties from South Africa, are taxed on 30% of the gross amount of such payments. A withholding tax of 12% on gross royalties is levied and is payable by the South African entity which is liable for the royalty, on behalf of the non-resident.

6.9.2. Dividends, Interest and Branch Profits

From 1 October 1995 the old non-resident shareholders tax has been abolished, and dividends payable to non-residents are not taxable, either with a withholding tax or in the hands of the recipient.

In certain instances, income from a foreign source is deemed to be from a South African source for tax purposes. Examples include the proceeds derived from a contract concluded in South Africa for the sale of moveable goods and the remuneration received by an employee who is ordinarily resident in South Africa for services rendered during a temporary absence from South Africa. South African residents and companies incorporated or managed and controlled in South Africa are entitled to a rebate for foreign taxes paid on income from a foreign source to the extent of the local tax payable on such income. Such rebate will not be granted in addition to any relief to which the taxpayer is entitled under an international tax treaty, but it may be granted in place of treaty relief.

For further information please contact: 

Werksmans Attorneys 

Werksmans Chambers, 22 Girton Road, Parktown, Johannesburg 2193 
P.O. Box 927, Johannesburg 2000 South Africa

Enquiries:        Mr Charles Butler
Telephone         27 (011) 488-0000
Telefax           27 (011) 484-3100/3200
E-Mail Address    cbutler@werksmans.co.za