Taxpayer received dividends from a company in Mauritius how should the dividends tax be declared on the DTR and who pays this over to SARS?
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
In the Income Tax Act, unless the context otherwise indicates, “foreign dividend” means any amount that is paid or payable by a foreign company in respect of a share in that foreign company where that amount is treated as a dividend or similar payment by that foreign company for the purposes of the laws relating to –
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tax on income on companies of the country in which that foreign company has its place of effective management; or
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companies of the country in which that foreign company is incorporated, formed or established, where the country in which that foreign company has its place of effective management does not have any applicable laws relating to tax on income,
but does not include any amount so paid or payable that –
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constitutes a redemption of a participatory interest in an arrangement or scheme contemplated in paragraph (e)(ii) of the definition of 'company'; or
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…
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constitutes a share in that foreign company; …
From the information provided the dividend, received from the Mauritius company (we accept it is not a resident of the RSA), is a foreign dividend.
Under section 64E the dividends tax is levied on the amount of any dividend paid by any company other than a headquarter company. It is not levied on a foreign dividend.
The foreign dividend is taxed as normal income and is declared by the beneficial owner, the RSA company, in its ITR14.