50D. Exemption from withholding tax on interest
(1) Subject to subsection (2), there must be exempt from the withholding tax on interest any amount of interest –
(a) if that amount of interest is paid to any foreign person –
(i) by –
(aa) the government of the Republic in the national, provincial or local sphere;
(bb) any bank, the South African Reserve Bank, the Development Bank of Southern Africa or the Industrial Development Corporation; or
(cc) a headquarter company in respect of the granting of financial assistance as defined in section 31(1) to which section 31 does not apply as a result of the exclusion contained in section 31(5)(a);or
[Item (cc) substituted by section 71 of Act 25 of 2015 effective on 1 March 2015]
(ii) in respect of any listed debt;
[Item (ii) amended by section 71 of Act 25 of 2015 effective on 1 March 2015]
(b) payable as contemplated in section 21(6) of the Financial Markets Act to any foreign person that is a client as defined in section 1 of that Act;
[Paragraph (b) amended by section 71 of Act 25 of 2015 and section 56 of Act 15 of 2016 effective on 1 March 2015, applies in respect of interest that is paid or becomes due and payable on or after that date]
(c) paid to a foreign person in respect of a debt owed by another foreign person unless-
(i) the other 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 interest is paid; or
(ii) the debt claim in respect of which that interest is paid is effectively connected with a permanent establishment of that other foreign person in the Republic if that other foreign person is registered as a taxpayer in terms of Chapter 3 of the Tax Administration Act;
[Subparagraph (ii) amended by section 59 of Act 23 of 2018 effective on 17 January 2019]
[Paragraph (c) added by section 71 of Act 25 of 2015 and amended by section 56 of Act 15 of 2016 effective on 1 March 2015, applies in respect of interest that is paid or becomes due and payable on or after that date]
(d) if that amount of interest is paid to-
(i) the African Development Bank established on 10 September 1964;
(ii) the World Bank established on 27 December 1945 including the International Bank for Reconstruction and Development and International Development Association;
(iii) the International Monetary Fund established on 27 December 1945;
(iv) the African Import and Export Bank established on 8 May 1993;
(v) the European Investment Bank established on 1 January 1958 under the Treaty of Rome; or
(vi) the New Development Bank established on 15 July 2014;
[Subparagraph (vi) substituted by section 39(1)(a) of Act 17 of 2023 with effect 1 March, 2024 and applicable in respect of interest that is received by or accrues to a trust that is resident on or after that date]
[Paragraph (d) added by section 56 of Act 15 of 2016 effective on 1 March 2015, applies in respect of interest that is paid or becomes due and payable on or after that date]
(e) included in the income of a resident as is attributable to a donation, settlement or other disposition made by a resident as contemplated in section 7(8)(a); or
[Paragraph (e) added by section 59 of Act 23 of 2018 and substituted by section 39(1)(b) of Act 17 of 2023 with effect 1 March, 2024 and applicable in respect of interest that is received by or accrues to a trust that is resident on or after that date]
(f) that 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 (f) added by section 39(1)(c) of Act 17 of 2023 with effect 1 March, 2024 and applicable in respect of interest that is received by or accrues to a trust that is resident on or after that date]
(2) Interest paid to a foreign person in respect of any amount advanced by the foreign person to a bank is not exempt from the withholding tax on interest if the amount is advanced in the course of any arrangement, transaction, operation or scheme to which the foreign person and any other person are parties and in terms of which the bank advances any amount to that other person on the strength of the amount advanced by the foreign person to the bank.
(3) A foreign person is exempt from the withholding tax on interest if-
(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 interest is paid; or
(b) the debt claim in respect of which that interest 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.