Section 49C (ITA) – Liability for tax

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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).

Section 49B (ITA) – Levy of withholding tax on royalties

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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.

“Royalty” definition of section 49A of ITA

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“royalty” means any amount that is received or accrues in respect of-

 

(a)     the use or right of use of or permission to use any intellectual property as defined in section 23I; or

 

(b)     the imparting of or the undertaking to impart any scientific, technical, industrial or commercial knowledge or information, or the rendering of or the undertaking to render any assistance or service in connection with the application or utilisation of such knowledge or information.

Section 48C – Transitional provisions

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48C.    Transitional Provisions

(1)     Where an amount-

(a)     was received by a person during a year of assessment when it was a registered micro business;

(b)     was included in that person’s taxable turnover for that year of assessment; and

(c)     accrues to that person when it is no longer a registered micro business,

that amount must not be taken into account as a receipt or accrual for purposes of determining the taxable income of that person.

(2)     Where an amount-

(a)     accrued to a person when it was a registered micro business;

(b)     would have been included in that person’s taxable turnover had it been received on the date that it accrued; and

(c)     is received by that person when it is no longer a registered micro business,

10 per cent of that amount must be included in the taxable income of that person for the year of assessment in which it is received.

[Words following paragraph (c) to be substituted by section 67 of Act 25 of 2015 effective on 1 March 2015]

(3)     Where a registered micro business is deregistered, any trading stock held and not disposed of by it as at the date with effect from which it is deregistered shall, for purposes of the application of section 22, be deemed to have been trading stock held and not disposed of by it at the beginning of the year of assessment within which that date falls.

(4)     Where in the course of a year of assessment a registered micro business is deregistered in terms of paragraph 10(2) of the Sixth Schedule and a person becomes liable for payment of tax in terms of section 5 in respect of the taxable income of that deregistered micro business, that person is exempt from any penalties for underpayment of tax for which that person, solely as a result of becoming so liable in respect of that taxable income, would otherwise become liable under the Fourth Schedule to this Act or Chapter 15 of the Tax Administration Act.

[Subsection (4) added by section 3 of Act 13 of 2017 effective on 1 March 2018, applies in respect of years of assessment commencing on or after that date]

49.  ……….

Section 48B – Rates

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48B.     Rates

 

(1)     The rates of tax chargeable in terms of section 48A must be fixed annually by Parliament.

 

(2)     The rates fixed by Parliament in respect of any year of assessment continue to apply until the next such determination of rates and will be applied for the purposes of calculating the tax payable in respect of the taxable turnover of a registered micro business during the next succeeding year of assessment if, in the opinion of the Commissioner, the calculation and collection of the tax chargeable in respect of such taxable turnover cannot without the risk of loss of revenue be postponed until after the rates for that year have been determined.

Section 91 – Recovery of tax

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91.     Recovery of tax

 

(1)     ……….

 

(2)     ……….

 

(3)     ……….

 

(4)     So much of any tax payable by any person as is due to the inclusion in his income of any income deemed to have been received by him or to be his income, as the case may be, in terms of subsection (3), (4), (5), (6), (7) or (8) of section seven, may be recovered from the assets by which the income so included was produced.

 

(4A)  So much of any tax payable by any person as is due to the inclusion in the taxable income of such person of any capital gain in terms of paragraph 68, 69, 70, 71 or 72 of the Eighth Schedule, may be recovered from the proceeds on the disposal of the asset, as contemplated in the Eighth Schedule, which gave rise to the capital gain.

 

(5)     So much of any interest payable in terms of section eighty–nine as relates to such portion of any tax as is in terms of subsection (4) recoverable from the assets referred to in that subsection may also be recovered from such assets HIA.

 

92.  ……….

 

93.  ……….

 

94.  ……….

Section 90 – Persons by whom normal tax payable

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90.     Persons by whom normal tax payable

 

Subject to the provisions of this Act and the Tax Administration Act, any normal tax is payable by the person by whom any taxable income is received or to whom or in whose favour it accrues or who is legally entitled to the receipt thereof

 

Provided that any person may recover so much of the taxation paid by him under this Act as is due to the inclusion in –

 

(i)      his income of any income deemed to have been received by him or to be his income, as the case may be, in terms of section 7 (3), (4), (5), (6), (7) or (8), from the person entitled, whether on his own behalf or in a representative capacity, to the receipt of the income so included; or

 

(ii)     his taxable income of any capital gain in terms of paragraph 68, 69, 70, 71 or 72 of the Eighth Schedule from the person entitled, whether personally or in a representative capacity, to the proceeds on the disposal of the asset, as contemplated in the Eighth Schedule, which gave rise to the capital gain:

 

Provided further that nothing herein contained shall be construed as relieving any person required to make any payment by way of employees’ tax under the provisions of the Fourth Schedule from any liability, responsibility or duty imposed upon him by this Act.