Sasol Form 20-F for the year ended 30 June 2021 - Book - Page 98
the transfer of a depository receipt issued by a
company. Generally, the central securities depository
that has been accepted as a participant in terms of the
Financial Markets Act, 19 of 2012 (that commenced on
3 June 2013) is liable for the payment of the STT, on
the basis that the STT is recoverable from the person to
whom the security is transferred.
Dividend stripping and anti-avoidance rules relating
to share buy-backs
Anti-avoidance rules relating to share buy
backs and dividend stripping were strengthened
effective 19 July 2017 to address avoidance
mechanisms utilised to erode the value of the shares
through distribution of dividends prior to the disposal
of shares. Such anti-avoidance dividend rules apply to
situations where excessive dividends (as defined) are
declared prior to disposal of shares and only to the
extent that such dividends are treated as exempt
dividend therefore not subject to dividend withholding
tax. Where exempt dividends qualify as extraordinary
dividends, the exempt dividends are re-characterised as
proceeds for capital gains tax purposes or revenue for
income tax purposes resulting in an increased tax
liability for the seller of the shares.
Withholding taxes
A withholding tax on interest at the rate of
15% is currently applicable. This withholding tax is
reduced to zero percent in terms of the Treaty to the
extent that the interest is derived and beneficially
owned by a resident of the other Contracting State (i.e.
state/ party to a bilateral double taxation agreement).
The administrative compliance obligation must be
adhered to prior to the payment of the interest to benefit
from the treaty rate.
Ordinary shares
A withholding tax on royalties at the rate of
15% is currently applicable. This withholding tax is
reduced to zero percent in terms of the Treaty to the
extent that the royalty is derived and beneficially
owned by a resident of the other Contracting State. The
administrative compliance obligation must be adhered
to prior to the payment of the interest to benefit from
the treaty rate.
Excessive dividends (referred to as the amount
of any dividend received or accrued within 18 months
prior to the disposal of that share or in respect, by
reason or in consequence of that disposal, as exceeding
15% of the higher of the market value of that share at
the beginning of the 18 months and as at the date of
disposal of the share).
Reportable arrangements
Preference shares
The legislation dealing with Reportable
Arrangements (RA) was promulgated during
February 2016 which places a requirement on South
African taxpayers to report certain transactions which
are perceived by SARS to have characteristics that may
lead to undue tax benefits. The reporting of such
transactions intends to give SARS advance notice of the
arrangements. In this regard, RA would typically
include the following:
Excessive dividends equate to the amount of
any dividend received or accrued in respect of that
share as exceeding the amount that would have accrued
in respect to that share had it been determined with
reference to the consideration for which that share was
issued by applying an interest rate of 15% per annum
for the period in respect of which the dividend was
received or accrued.
Securities transfer tax
With effect from 1 July 2008, a single security
transfer tax of 0,25% was introduced and is applicable
to all secondary transfers of shares. No securities
transfer tax (STT) is payable on the issue of securities,
even though it is payable on the redemption of
securities. STT is payable in South Africa regardless of
whether the transfer is executed within or outside South
Africa. A transfer of a dematerialised share can only
occur in South Africa.
A security is also defined as a depository
receipt in a company. Accordingly, STT is payable on
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hybrid equity instruments (excluding
listed instruments);
share buy backs in excess of R10 million
and that company issued or is required to
issue any shares within 12 months of
entering into that arrangement or of the
date of any buy-back in terms of that
arrangement;
contributions/payments to non-resident
trusts in excess of R10 million;