57. Disposals by companies under donations at the instance of any person
If-
(a) any property is disposed of by any company at the instance of any person; and
(b) that disposal would have been treated as a donation had that disposal been made by that person,
that property must for the purposes of this Part be deemed to be disposed of under a donation by that person.
‘effective date’ means the date on which this Part comes into operation;
49B. Levy of withholding tax on royalties
(1)
(a) There must be levied for the benefit of the National Revenue Fund a tax, to be known as the withholding tax on royalties, calculated-
(i) at the rate of 15 per cent; or
(ii) at such rate as the Minister may announce in the national annual budget contemplated in section 27(1) of the Public Finance Management Act, with effect from a date mentioned in that Announcement,
of the amount of any royalty that is paid by any person to or for the benefit of any foreign person to the extent that the amount is regarded as having been received by or accrued to that foreign person from a source within the Republic in terms of section 9(2)(c), (d), (e) or (f).
(b) If the Minister makes an announcement contemplated in paragraph (a)(ii), that rate comes into effect on the date determined by the Minister in that announcement and continues to apply for a period of 12 months from that date subject to Parliament passing legislation giving effect to that announcement within that period of 12 months.
[Subsection (1) substituted by section 97 of Act 31 of 2013 and section 57 of Act 17 of 2017 effective on 18 December 2017]
(2) For the purposes of this Part, a royalty is deemed to be paid on the earlier of the date on which the royalty is paid or becomes due and payable.
(3) The withholding tax on royalties is a final tax.
(4) Where a person making payment of a royalty to or for the benefit of a foreign person has withheld an amount as contemplated in section 49E(1), that person must, for the purposes of this Part, be deemed to have paid the amount so withheld to that foreign person.
57A. Donations by spouses married in community of property
For the purposes of this Part, in the case of spouses married in community of property, where any property is disposed of in terms of a donation by one of the spouses and –
(a) such property falls within the joint estate of the spouses, such donation shall be deemed to have been made in equal shares by each spouse; and
(b) such property was excluded from the joint estate of the spouses, such donation shall be deemed to have been made solely by the spouse making the donation.
‘regulated intermediary’ means any-
(a) central securities depository participant contemplated in section 32 of the Financial Markets Act;
(b) authorised user as defined in section 1 of the Financial Markets Act;
(c) approved nominee contemplated in section 76(3) of the Financial Markets Act;
(d) nominee that holds investments on behalf of clients as contemplated in section 9.1 of Chapter 1 and section 8 of Chapter II of the Codes of Conduct for Administrative and Discretionary Financial Service Providers, 2003 (Board Notice 79 of 2003) published in Government Gazette No. 25299 of 8 August 2003;
(e) portfolio of a collective investment scheme in securities;
[Paragraph (e) amended by section 70 of Act 7 of 2010 effective on 1 April 2012 and section 73 of Act 25 of 2015 effective on 1 April 2015]
(f) transfer secretary that is a person other than a natural person and that has been approved by the Commissioner subject to such conditions and requirements as may be determined by the Commissioner; or
[Paragraph (f) inserted by section 70 of Act 7 of 2010 effective on 1 April 2012, amended by section 73 of Act 25 of 2015 effective on 1 April 2015]
(g) a portfolio of a hedge fund collective investment scheme.
[Paragraph (g) added by section 73 of Act 25 of 2015 and amended by section 60 of Act 17 of 2017 effective on 18 December 2017]
49C. Liability for tax
(1) A foreign person to which a royalty is paid is liable for the withholding tax on royalties to the extent that the royalty is regarded as having been received by or accrued to that foreign person from a source within the Republic in terms of section 9(2)(c), (d), (e) or (f).
(2) Any amount of withholding tax on royalties that is-
(a) withheld as contemplated in section 49E(1); and
(b) paid as contemplated in section 49F(1),
is a payment made on behalf of the foreign person to which the royalty is paid in respect of that foreign person’s liability under subsection (1).
58. Property disposed of under certain transactions deemed to have been disposed of under a donation
(1) Where any property has been disposed of for a consideration which, in the opinion of the Commissioner, is not an adequate consideration that property shall for the purposes of this Part be deemed to have been disposed of under a donation: Provided that in the determination of the value of such property a reduction shall be made of an amount equal to the value of the said consideration.
(2) Where a person disposes of a restricted equity instrument, as defined in section 8C, under the circumstances contemplated in section 8C(5)(a) or (b), that restricted equity instrument shall for the purposes of this Part be deemed to have been donated by that person at the time that it is deemed to vest for the purposes of section 8C and to have a value equal to the fair market value of that instrument at that time: Provided that in the determination of the value of that restricted equity instrument a reduction shall be made of an amount equal to the value of any consideration in respect of that donation.
‘STC credit’ ……….
[Definition of “STC credit” deleted by section 60 of Act 23 of 2018 effective on 17 January 2019]
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]
59. Persons liable for the tax
The person liable for donations tax shall be the donor: Provided that if the donor fails to pay the tax within the period prescribed in subsection (1) of section 60 the donor and the donee shall be jointly and severally liable for the tax.