50E.    Withholding of withholding tax on interest by payers of interest

(1)     Subject to subsections (2) and (3), any person who makes payment of any amount of interest to or for the benefit of a foreign person must withhold an amount of withholding tax on interest calculated at the rate contemplated in section 50B(1) from that payment.

[Subsection (1) substituted by section 65 of Act 43 of 2014 effective on 1 March 2015 – comes into operation in terms of section 65 of Act 43 of 2014, substituted by section 154 of Act 25 of 2015)]

(2)     A person must not withhold any amount from any payment contemplated in subsection (1) –

(a)     to the extent that the interest is exempt from the withholding tax on interest in terms of section 50D(1); or

 

(b)     if the foreign person to or for the benefit of which that payment is to be made has, before the interest 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 50D(3) or an agreement for the avoidance of double taxation, exempt from the withholding tax on interest in respect of that payment; and

(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 interest no longer be for the benefit of that foreign person.

[Paragraph (b) amended by section 57 of Act 15 of 2016 and substituted by section 4(1)(a) of Act 33 of 2019]

(3)     The rate referred to in subsection (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 interest is paid, submitted to the person making the payment-

(a)     a declaration in such form as may be prescribed by the Commissioner that the interest 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 interest no longer be for the benefit of that foreign person.

[Subsection (3) amended by section 57 of Act 15 of 2016 and substituted by section 4(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, unless the person making the payment is subject to the provisions of-

(a)     the Financial Intelligence Centre Act, 2001 (Act 38 of 2001);

(b)     the Agreement Between the Government of the Republic of South Africa and the Government of the United States of America to improve International Tax Compliance and to Implement the US Foreign Account Tax Compliance Act; or

(c)     the regulations for purposes of paragraph (a) of the definition of “international tax standard” in section 1 of the Tax Administration Act,

with regard to the foreign person to or for the benefit of which the payment is to be made and takes account of these provisions in monitoring the continued validity of the declaration.

[Subsection (4) added by section 4(1)(c) of Act 33 of 2019 effective on 1 July, 2020]