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 benefit of a foreign person must withhold an amount of withholding tax on royalties from that payment.
[Subsection (1) substituted by section 61 of Act 43 of 2014 effective on 1 July 2013]
(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 benefit of which that payment is to be made has, before the royalty is paid, submitted to the person making the payment—
(i) 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) or an agreement for the avoidance of double taxation, exempt from the withholding tax on royalties in respect of that payment; and
[Subparagraph (i) substituted by section 30(1) of Act 20 of 2021 effective on 1 January, 2022 and applicable in respect of royalties paid on or after that date]
(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 the circumstances affecting the exemption referred to in subparagraph (i) change or should the payment of the royalty no longer be for the benefit of that foreign person.
[Paragraph (b) substituted by section 69 of Act 25 of 2015 and by section 3(1)(a) of Act 33 of 2019]
(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 benefit of which the payment contemplated in that subsection is to be made has, before the royalty is paid, submitted to the person making the payment-
(a) 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; and
(b) a written undertaking in such form as may be prescribed by the Commissioner to forthwith inform the person making the payment in writing, should the circumstances affecting the application of the agreement referred to in paragraph (a) change or should the payment of the royalty no longer be for the benefit of that foreign person.
[Subsection (3) substituted by section 3(1)(b) of Act 33 of 2019]
(4) A declaration and written undertaking submitted in terms of subsection (2)(b) or (3) are no longer valid after a period of five years from the date of the declaration.
[Subsection (4) added by section 3(1)(c) of Act 33 of 2019 effective on 1 July, 2020]