Proposed changes to non-resident interest exemption
New amendments proposed by SARS will affect the interest payments to non-resident natural persons from 1 January 2013, other than for those exemptions listed below. Current legislation exempts the interest earned by or accrued to non-residents, provided the non- resident spends more than 183 days out of RSA.
From 1 January 2013 such interest payment or payables will be subject to an interest withholding tax at 15% or where no withholding tax is withheld, the interest income would be subject to full income tax in RSA in the hands of the non-resident. The tax liability may be reduced depending on the applicable double tax treaty.
Certain exemptions from the withholding tax include:
- Government Debt interest (eg bonds issues by any sphere of government)
- Listed Debt instruments (eg Listed debentures on JSE)
- Any debt owed by a domestic Bank in RSA (eg bank deposits)
- International trade finance (eg bills of exchange and letters of credit)
- Dealer and brokerage accounts
- Any interest received/accrued to a non-resident from another non-resident
All material subject to our Legal Disclaimers.