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
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