n Tax Breaks Newsletter - Withholding taxes on service fees meets an early demise : snippet

Volume 2016, Issue 363
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The 2016 Budget proposed the withdrawal of the withholding taxes on service fees paid to foreign persons before it could take effect on 1 January 2017. As this withholding tax introduced unforeseen issues, including uncertainty on the application of domestic tax law and taxing rights under tax treaties, Government proposed that it rather be dealt with as a reportable arrangement in terms of the Tax Administration Act. SARS presumably wants to be alerted to the payment of substantial service fees to non-residents for rendering services in South Africa, as it may indicate the existence of undeclared permanent establishments by non-residents in South Africa.

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