Page 278 - SAIT Compendium 2016 Volume1

s 50C INCOME TAX ACT 58 OF 1962 s 50E
50C Liability for tax
(1) A foreign person to which an amount of interest is paid is liable for the withholding tax on interest to the extent that the interest is regarded as having been received by or accrued to that foreign person from a source within the Republic in terms of section 9 (2) (b).
(2) Where any amount of withholding tax on interest is—
(a) withheld as contemplated in section 50E (1); and
(b) paid as contemplated in section 50F (2),
that amount of withholding tax on interest must be regarded as an amount that is paid in respect of that foreign person’s liability under subsection (1).
[S. 50C inserted by s. 98 (1) of Act 31 of 2013 – date
of commencement: 1 March 2015 (‘1 January 2015’ replaced by ‘1 March 2015’ by s. 125 of Act 43 of 2014); this section applies iro interest that is paid or that becomes due and payable on or after that date.]
50D Exemption from withholding tax on interest
(1) Subject to subsection (2), there must be exempt from the withholding tax on interest any amount of interest— (a) if that amount of interest is paid to any foreign
person— (i) by—
(aa)the government of the Republic in the national, provincial or local sphere;
(bb) any bank, the South African Reserve Bank, the Development Bank of Southern Africa or the Industrial Development Corporation; or
(cc) a headquarter company in respect of the granting of nancial assistance as de ned in section 31 (1) to which section 31 does not apply as a result of the exclusion contained in section 31 (5) (a); or
[Item (cc) substituted by s. 71 (1) (a) of Taxation Laws Amendment Act, 2015 (’exclusions’ replaced by ‘exclusion’) – date of commencement deemed to have been 1 March 2015; the substitution applies iro interest that is paid or that becomes due and payable on or after that date.]
(ii) in respect of any listed debt;
(b) payable as contemplated in section 21 (6) of the
Financial Markets Act to any foreign person that is a
client as de ned in section 1 of that Act; or
(c) paid to a foreign person in respect of a debt owed by
another foreign person unless—
(i) the other 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 interest is paid; or
(ii) the debt claim in respect of which that interest is paid is effectively connected with a permanent establishment of that other foreign person in the Republic if that other foreign person is registered as a taxpayer in terms of Chapter 3 of the Tax Administration Act.
[Para. (c) added by s. 71 (1) (b) of Taxation Laws Amendment Act, 2015 – date of commencement deemed to have been 1 March 2015; the paragraph applies iro interest that is paid or that becomes due and payable on or after that date.]
(2) Interest paid to a foreign person in respect of any amount advanced by the foreign person to a bank is not exempt from the withholding tax on interest if the amount is advanced in the course of any arrangement, transaction, operation or scheme to which the foreign person and any
other person are parties and in terms of which the bank advances any amount to that other person on the strength of the amount advanced by the foreign person to the bank.
(3) A foreign person is exempt from the withholding tax on interest if—
(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 interest is paid; or
(b) the debt claim in respect of which that interest 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.
[S. 50D inserted by s. 98 (1) of Act 31 of 2013 – date
of commencement: 1 March 2015 (‘1 January 2015’ replaced by ‘1 March 2015’ by s. 125 of Act 43 of 2014); this section applies iro interest that is paid or that becomes due and payable on or after that date.]
50E Withholding of withholding tax on interest by payers of interest
(1) Subject to subsections (2) and (3), any person who makes payment of any amount of interest to or for the bene t of a foreign person must withhold an amount of withholding tax on interest calculated at the rate contemplated in section 50B (1) from that payment. [Sub-s. (1) substituted by s. 65 (1) of Act 43 of 2014 – date of commencement: 1 March 2015 (Note: ‘1 January 2015’
retrospectively replaced by ‘1 March 2015’) by s. 154 (1) of Taxation Laws Amendment Act, 2015); this substitution applies iro interest that is paid or that becomes due and payable on or after that date.]
(2) A person must not withhold any amount from any payment contemplated in subsection (1)—
(a) to the extent that the interest is exempt from the
withholding tax on interest in terms of section 50D
(1); 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 50D (3), exempt from the withholding tax on interest in respect of that payment.
(3) The rate referred to in subsection (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—
(i) a declaration in such form as may be prescribed by the Commissioner that the interest is subject to that reduced rate of tax as a result of the application of an
agreement for the avoidance of double taxation; and (ii) a written undertaking in such form as may be prescribed by the Commissioner to forthwith inform the person making the payment in writing should
270 SAIT CompendIum oF TAx LegISLATIon VoLume 1