Page 32 - Profmark BSA Guide 2025

Foreign dividends (including deemed dividends)
Foreign Dividends received from a non–resident company are taxable.
Foreign dividends are, however, exempt as follows:
■ If received by a resident who holds at least 10% of the equity shares in the foreign
company.
■ The shareholder is a company which is in the same country as the foreign
company paying the dividend.
■ If declared by a company listed on the SA stock exchange.
■ If paid out of the profits of a foreign company if the profits of the foreign company
have been included in the South African shareholder’s income in terms of the CFC
provisions.
Where a foreign dividend is not exempt in terms of the provisions above the following
part of a foreign dividend will be exempt from tax:
■ Individuals and trusts: subject to a maximum effective tax rate of 20%.
■ Companies: subject to an effective tax rate of 20%.
No deduction will be granted for any expenditure incurred in the production of income
in the form of foreign dividends.
Foreign tax credits
Residents are allowed to deduct all foreign taxes paid in respect of foreign source
income from the tax payable in SA on such foreign income. Any excess credits may
be carried forward. Where foreign tax is withheld on South African source income, the
taxpayer can claim a deduction against income.
Non-Residents
Non-residents are taxed on all income from a South African source. In other words,
tax on the income of non-South African resident’s is source-based, meaning that any
income from a source within (or deemed to be within) SA is taxed, irrespective of the
residence of the recipient of the income. Non-residents may invest in the Republic,
provided that suitable documentary evidence is received in order to ensure that such
transactions are concluded at arms-length, at fair market-related prices, and are
financed in an approved manner subject to exchange control approval.

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