2011 was a tumultuous year for South African taxpayers. As usual, the Budget Speech in February announced significant tax law changes. These included clamping down on tax arbitrage in the form of dividends.
Director and Joint Head of Tax
Edward Nathan Sonnenbergs
In this regard, South Africa’s tax system exempts dividends from normal tax. In terms of the dividend tax provisions which will come into effect in April 2012, such dividends will be subject to a withholding tax at the rate of 10%.
However, in terms of South Africa’s tax law, a full deduction is allowed for interest payments. This gives rise to tax arbitrage.
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Peter Dachs is the director and joint head of tax at Edward Nathan Sonnenbergs.
Johannesburg
150 West Street
Sandton
Johannesburg
South Africa
2196
Tel: +27 11 269 7600
Fax: +27 11 269 7899
E-mail: info@ens.co.za
www.ens.co.za
