Page 276 - SAIT Compendium 2016 Volume1

s 49C INCOME TAX ACT 58 OF 1962 s 49F
[S. 49C inserted by s. 80 (1) of Act 22 of 2012 – date of commencement: 1 July 2013; this section applies in respect of royalties that are paid or that become due and payable on or after that date, but only to the extent that the amount of the royalties was not subject to tax in terms of s. 35 of the Income Tax Act, 1962.]
49D Exemption from withholding tax on royalties
A foreign person is exempt from the withholding tax on royalties if—
[Words in s. 49D preceding para. (a) substituted by s. 68 (a) of Taxation Laws Amendment Act, 2015 (‘withholding tax on’ inserted) – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
(a) that foreign person is a natural person who was physically present in the Republic for a period exceeding 183 days in aggregate during the twelve-month period preceding the date on which the royalty is paid; or
(b) the property in respect of which that royalty is paid is effectively connected with a permanent establishment of that foreign person in the Republic if that foreign person is registered as a taxpayer in terms of Chapter 3 of the Tax Administration Act; or
[Para. (b) substituted by s. 68 (b) of Taxation Laws
Amendment Act, 2015 – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
(c) that royalty is paid by a headquarter company in respect of the granting of the use or right of use of or permission to use intellectual property as de ned in section 23I to which section 31 does not apply as a result of the exclusions contained in section 31 (5) (c) or (d).
[S. 49D inserted by s. 80 (1) of Act 22 of 2012 (date of commencement: 1 July 2013; this section applies iro royalties that are paid or that become due and payable on or after that date, but only to the extent that the amount of the royalties was not subject to tax in terms of s. 35 of the Income Tax Act, 1962) and retrospectively substituted by s. 60 (1) of Act 43 of 2014 – date of commencement deemed to have been 1 July 2013 as well; the substituted section applies iro royalties that are paid or that become due and payable on or after that date and iro which an exemption under s. 49D has not been granted.]
49E Withholding of withholding tax on royalties by payers of royalties
(1) Subject to subsections (2) and (3), any person making payment of any amount of royalties to or for the bene t of a foreign person must withhold an amount of withholding tax on royalties from that payment.
[Sub-s. (1) retrospectively substituted by s. 61 (1) of Act 43 of 2014 – date of commencement deemed to have been 1 July 2013; the substituted subsection applies iro royalties that are paid or that become due and payable on or after that date and iro which withholding tax on royalties has not been withheld under s. 49E.]
(2) A person must not withhold any amount from any payment contemplated in subsection (1)—
(a) to the extent that the royalty is exempt from the withholding tax on royalties in terms of section 49D (c); or
(b) if the foreign person to or for the bene t of which that payment is to be made has—
(i) by a date determined by the person making the payment; or
(ii) if the person making the payment did not determine a date as contemplated in subparagraph (i), by the date of the payment,
submitted to the person making the payment a declaration in such form as may be prescribed by the Commissioner that the foreign person is, in terms of section 49D (a) or (b), exempt from the withholding tax on royalties in respect of that payment.
[Para. (b) substituted by s. 69 of Taxation Laws Amendment Act, 2015 – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
Prelex
Wording of para. (b) in force until its substitution wef date of promulgation of Taxation Laws Amendment Act, 2015
(b) if the foreign person to or for the bene t of which
that payment is to be made has—
(i) by a date determined by the person making the
payment; or
(ii)if the person making the payment did
not determine a date as contemplated in subparagraph (i), by the date of the payment, submitted to the person making the payment a declaration in such form as may be prescribed by the Commissioner that the foreign person is, in terms of section 49D (a) or (b), exempt from the withholding tax on royalties in respect of that payment.
Prelex
Wording of para. (b) in force until its substitution wef date of promulgation of Taxation Laws Amendment Act, 2015
(b) the property in respect of which that royalty is
paid is effectively connected with a permanent establishment of that foreign person in the Republic if that foreign person is registered as a taxpayer for the purposes of this Act; or
[Sub-s. (2) retrospectively substituted by s. 61 (1) of Act 43 of 2014 – date of commencement deemed to have been 1 July 2013; the substituted subsection applies iro royalties that are paid or that become due and payable on or after that date and iro which withholding tax on royalties has not been withheld under s. 49E.]
(3) The rate referred to in section 49B (1) must, for the purposes of that subsection, be reduced if the foreign person to or for the bene t of which the payment contemplated in that subsection is to be made has—
(a) by a date determined by the person making the
payment; or
(b) if the person making the payment did not determine a
date as contemplated in paragraph (a), by the date of
the payment,
submitted to the person making the payment a declaration in such form as may be prescribed by the Commissioner that the royalty is subject to that reduced rate of tax as a result of the application of an agreement for the avoidance of double taxation.
[S. 49E inserted by s. 12 (1) of Act 21 of 2012 – date of commencement: 1 July 2013; this section applies in respect of royalties that are paid or that become due and payable on or after that date, but only to the extent that the amount of the royalties was not subject to tax in terms of s. 35 of the Income Tax Act, 1962.]
49F Payment and recovery of tax
(1) If, in terms of section 49C, a foreign person is liable for any amount of withholding tax on royalties in respect of any amount of royalties that is paid to or for the bene t of the foreign person, that foreign person must pay that amount of withholding tax by the last day of the month
268 SAIT CompendIum oF TAx LegISLATIon VoLume 1