Sasol Form 20-F for the year ended 30 June 2021 - Book - Page 97
The concept of CTC effectively means the
sum of the stated capital or share capital and share
premium of a company that existed on 1 January 2011,
excluding any transfers from reserves to the share
premium account or stated capital account, plus
proceeds from any new issue of shares by a company.
Any application of CTC is limited to the holders of a
class of shares and specifically that a distribution of
CTC attributable to a specific class of shares must be
made proportionately to the number of shares held by a
shareholder in a specific class of shares. In other words,
CTC can only be used proportionately by a company
and cannot be applied by a company for the benefit of
only one specific shareholder. The CTC of the
company cannot therefore also be used in respect of
different classes of shares and the CTC of a specific
class is ring-fenced.
In addition, we continue to investigate and invest in
initiatives that result in such energy efficiency savings
while shifting towards a relatively low-carbon
footprint, thereby effectively managing our carbon tax
liability for the group.
Taxation of dividends
A dividends tax was introduced in South
Africa with effect from 1 April 2012. In terms of these
provisions, a dividends tax at the rate of 20% currently
is levied on any dividend paid by a company to a
shareholder. The liability to pay such dividends tax is
on the shareholder, even though the company generally
acts as a withholding agent. In the case of listed shares,
the regulated intermediary (being the Central Securities
Depository Participant referred to below) is liable to
withhold the dividends tax.
Taxation of gains on sale or other disposition
In the absence of any renegotiation of the
Treaty, the tax on the dividends paid to a US holder
with respect to shares or ADSs, is limited to 5% of the
gross amount of the dividends where a US corporate
holder holds directly at least 10% of the voting stock of
Sasol. The maximum dividends tax rate is equal to 15%
of the gross amount of the dividends in all other cases.
The applicable administrative forms need to be
completed by the US holder and received by the
regulated intermediary by the date of payment of the
dividend.
SA introduced a tax on capital gains effective
1 October 2001, which applies to SA residents and only
to non-residents if the sale is attributable to a
permanent establishment of the non-resident or if it
relates to an interest in immovable property in SA.
With effect from 1 October 2007, gains realised on the
sale of ordinary shares are automatically deemed to be
on capital account, and therefore, subject to capital
gains tax, if the ordinary shares have been held for a
continuous period of at least three years by the holder
thereof. This deeming provision is limited to ordinary
shares and does not extend to preference shares or
ADSs. The meaning of the word “resident” is different
for individuals and corporations and is governed by
the SA Income Tax Act, 58 of 1962 (the Income Tax
Act) and by the Treaty. In the event of conflict, the
Treaty, which contains a tie breaker clause or
mechanism to determine residency if a holder is
resident in both countries, will prevail. In terms of the
Income Tax Act and the Treaty, a US resident holder of
shares or ADSs will not be subject to capital gains tax
on the disposal of securities held as capital assets unless
the securities are linked to a permanent establishment
conducted in SA. In contrast, gains on the disposal of
securities which are not capital in nature are usually
subject to income tax. However, even in the latter case,
a US resident holder will not be subject to income tax
unless the US resident holder carries on business in SA
through a permanent establishment situated therein. In
such a case, this gain may be subject to tax in SA, but
only so much as is attributable generally to that
permanent establishment.
The definition of a dividend currently means
any amount, other than a dividend consisting of a
distribution of an asset in specie declared and paid as
contemplated in section 31(3), transferred or applied by
a company that is a resident (including Sasol) for the
benefit or on behalf of any person in respect of any
share in that company, whether that amount is
transferred or applied by way of a distribution made by
the company, or as consideration for the acquisition of
any share in that company. It specifically excludes any
amount transferred or applied by the company that
results in a reduction of so-called contributed tax
capital (CTC) or constitutes shares in the company or
constitutes an acquisition by the company of its own
securities by way of a general repurchase of securities
in terms of the JSE Listings Requirements. A
distinction is thus made between a general repurchase
of securities and a specific repurchase of securities. If
the company embarks upon a general repurchase of
securities, the proceeds are not deemed to be a dividend
whereas, in the case of a specific repurchase of
securities where the purchase price is not funded out of
CTC, the proceeds are likely to constitute a dividend.
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