The dividend is part of the earning of a corporation that is distributed to its shareholders; this excludes the return of contributed tax capital. However, dividends tax is a tax on shareholders when the dividends are paid to them, which in essence are withheld by an agent or where a regulated intermediary is involved.
The dividend tax is triggered by dividend payments from South African tax resident companies or the Foreign Company whose shares are listed on a South African Exchange according to SARS. However, Dividend payments by headquarter companies are not eligible for dividends tax.
The beneficial owner of the dividend should pay the dividends tax, and it is withheld from the dividend payment by a withholding agent and it is paid directly to SARS. If the agent fails to withhold the correct amount, you, as the beneficial owner of the dividend will be liable; it is your responsibility to pay the tax.
Dividends rates increased from 15% to 20% since 22 February 2017.
When should Dividends Tax be paid?
The withholding agent or the regulated intermediary should pay the dividends tax should pay the tax withheld to SARS on the last day of the month, following the month in which the dividend was paid and should be followed by a return (DTR01/02).
Late payments of dividends tax or dividends tax return may have consequences (Penalties).
Shareholders are liable for dividend tax when a dividend is paid to you, however, the agent should have to withhold and pay the tax to SARS.
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