n Without Prejudice - That dividend withholding tax : rearrangements might be prudent : tax

Volume 9, Issue 2
  • ISSN : 1681-178X



As part of the South Africa Revenue Services' (SARS) move towards a dividend withholding tax, an anti-avoidance measure was introduced in the recently promulgated Revenue Laws Amendment Act in the form of a passive holding company (PHC). The concern raised by SARS is that the new withholding tax system would present arbitrage opportunities for individuals to interpose a company in which to house their investments; company-to-company dividends will be exempt and companies are taxed at a lower rate of 28% as opposed to a maximum individual rate of 40%.

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