Author: admin_kmos

“Fair market value” definition of section 55 of ITA

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“fair market value”, means –

 

(a)     the price which could be obtained upon a sale of the property between a willing buyer and a willing seller dealing at arm’s length in an open market; or

 

(b)     in relation to immovable property on which a bona fide farming undertaking is being carried on in the Republic, the amount determined by reducing the price which could be obtained upon a sale of the property between a willing buyer and a willing seller dealing at arm’s length in an open market by 30 per cent;

“Donee” definition of section 55 of ITA

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“donee” means any beneficiary under a donation and includes, where property has been disposed of under a donation to any trustee to be administered by him for the benefit of any beneficiary, such trustee: Provided that any donations tax paid or payable by any trustee in his capacity as such may, notwithstanding anything to the contrary contained in the trust deed concerned, be recovered by him from the assets of the trust;

Section 54 (ITA) – Levy of donations tax

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54.    Levy of donations tax

 

Subject to the provisions of section 56, there shall be paid for the benefit of the National Revenue Fund a tax (in this Act referred to as donations tax) on the value of any property disposed of (whether directly or indirectly and whether in trust or not) under any donation by any resident (in this Part referred to as the donor).

Section 49G – Refund of withholding tax on royalties

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49G.    Refund of withholding tax on royalties

 

(1)     Notwithstanding  Chapter 13 of the Tax Administration Act, if-

 

(a)     an amount is withheld from a payment of a royalty as contemplated in section 49E(1);

 

(b)     a declaration contemplated in section 49E(2) or (3) in respect of that royalty is not submitted to the person paying that royalty by the date of the payment of that royalty; and

 

(c)     a declaration contemplated in section 49E(2) or (3) is submitted to the Commissioner within three years after the payment of the royalty in respect of which the declaration is made,

 

so much of that amount as would not have been withheld had that declaration been submitted by the date contemplated in the relevant subsection is refundable by the Commissioner to the person to which the royalty was paid.

[Subsection (1) inserted by section 12(1) of Act 21 of 2012 and renumbered by section 5 of Act 24 of 2020]

 

(2)     Notwithstanding Chapter 13 of the Tax Administration Act, if—

 

(a)     an amount of withholding tax on royalties is paid as contemplated in section 49E(1) in respect of an amount of royalties that became due and payable; and

 

(b)     the amount of royalties subsequently becomes irrecoverable,

 

so much of that amount as would not have been paid had the royalties not become due and payable is refundable by the Commissioner to the person who paid the tax.

[Subsection (2) added by section 5 of Act 24 of 2020]

Section 49F – Payment and recovery of tax

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49F.     Payment and recovery of tax

(1)     If, in terms of section 49C, a foreign person is liable for any amount of withholding tax on royalties in respect of any amount of royalties that is paid to or for the benefit of the foreign person, that foreign person must pay that amount of withholding tax and submit a return by the last day of the month following the month during which the royalty is paid, unless the tax has been paid by any other person.

[Subsection (1) substituted by section 62(1) of Act 43 of 2014 and by section 3 of Act 21 of 2021]

(2)     Any person that withholds any withholding tax on royalties in terms of section 49E must submit a return and pay the tax to the Commissioner by the last day of the month following the month during which the royalty is paid.

[Subsection (2) substituted by section 62 of Act 43 of 2014 effective on 1 January 2015]

Section 49E – Withholding of withholding tax on royalties by payers of royalties

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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]

Section 49D (ITA) – Exemption from withholding tax on royalties

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49D.    Exemption from withholding tax on royalties

A foreign person is exempt from the withholding tax on royalties if-

[Words preceding paragraph (a) substituted by section 68 of Act 25 of 2015 effective on 8 January 2016]

(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 royalty is paid; or

(b)     the property in respect of which that royalty 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;

[Paragraph (b) substituted by section 68(b) of Act 25 of 2015 and by section 38(1)(a) of Act 17 of 2023 with effect 1 March, 2024 and applicable in respect of royalties that are received by or accrues to a trust that is resident on or after that date]

(c)     that royalty is paid by a headquarter company in respect of the granting of the use or right of use of or permission to use intellectual property as defined in section 23I to which section 31 does not apply as a result of the exclusions contained in section 31(5)(c) or (d); or

[Paragraph (c) substituted by section 38(1)(b) of Act 17 of 2023 with effect 1 March, 2024 and applicable in respect of royalties that are received by or accrues to a trust that is resident on or after that date]

(d)     that royalty is received by or accrued to a trust that is a resident and is then paid to a beneficiary of that trust as a distribution by that trust.

[Paragraph (d) added by section 38(1)(c) of Act 17 of 2023 with effect 1 March, 2024 and applicable in respect of royalties that are received by or accrues to a trust that is resident on or after that date]

[Section 49D inserted by section 80 of Act 22 of 2012, substituted by section 60 of Act 43 of 2014 effective on 1 July 2013]