The draft Taxation Laws Amendment Bill, 2012 which was released
by National Treasury on 5 July 2012 proposes to amend, inter
alia, the interest exemption contained in section 10(1)(h) of
the Income Tax Act as from 1 January 2013, as well as the interest
withholding tax provisions which will come into effect on 1 January
The proposed amendments will likely have an effect on the
taxation of interest payments made from 1 January 2013 in respect
of certain debt instruments / notes issued by resident issuers to
Currently, section 10(1)(h) of the Tax Act exempts from income
tax an amount of South African sourced interest received by or
accrued to a non-resident during any year of assessment provided
such non-resident did not spend more than 183 days in aggregate in
South Africa (where the non-resident is a natural person) or
carried on business through a permanent establishment in South
Africa at any time during that year.
In terms of the proposed amendments, this exemption will only
apply to interest income which is not subject to the interest
withholding tax. The amendment to section 10(1)(h) will apply to
any interest which is paid or becomes payable on or after 1 January
2013 (irrespective whether such interest may have accrued to the
taxpayer before that date).
The effect of the above amendment is that if the interest
received by or accrued to a non-resident is subject to the
withholding tax it will be exempt from income tax. Conversely, if
the interest is exempt from the withholding tax it will be subject
to income tax.
As such, should an amount of South African sourced interest paid
to a non-resident of South Africa be exempt from the interest
withholding tax (eg certain interest payments made in respect of
listed debt or in respect of any debt owed by any bank), then such
interest income will not be exempt from South African income
In particular, the interest will be derived from a South African
source in the hands of the non-resident recipient and such
non-resident will therefore be liable to tax thereon subject to a
reduction of the South African income tax liability under an
applicable double taxation treaty.
It should be noted that the draft Taxation Laws Amendment Bill
2012 may be amended prior to it coming into effect.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Israeli tax law is changing regularly. There were various amendments to the Israeli Tax Code, including the reduction of tax rates. The following summarizes Israeli tax rates and other tax information for 2016.
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