With effect from 1 July 2013, interest arising from a source in South Africa and paid to foreign persons will be subject to a withholding tax at 15% in terms of amendments introduced by the Taxation Laws Amendment Act, No. 22 of 2012 (TLAA 2012).
The TLAA 2012 also introduced a withholding tax on royalty regime at 15% on royalties arising from a source in South Africa, and paid to foreign residents with effect from 1 July 2013. The latter regime will replace the existing withholding tax on royalties, currently levied at 12% in terms of section 35 of the Income Tax Act, No. 58 of 1962.
The 2013 Budget Review notably proposes to introduce a 15% withholding tax regime for cross-border services. To ease the administrative burden regarding withholding taxes, the 2013 Budget Review proposes that all three categories of withholding tax will become effective on 1 March 2014. The current effective date in the Income Tax Act of 1 July 2013 for the withholding tax on interest and royalties will thus have to be amended - hopefully before 1 July 2013.
Source: Income Tax Act and 2013 Budget Review
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