Quick refund - eligibility, documentation, deadlines - Equities in South Africa
Who can apply for a quick refund?
Eligible final beneficial owners who did not disclose themselves by providing the proper certification within the respective deadline for exemption/relief at source can apply for a quick refund of South African withholding tax.
South African Equities
A quick refund of withholding tax on dividends from South African Equities is available when paid to:
- Any non-resident beneficial owner (including those eligible to claim exemption under exemption code Y) that:
- Is resident in a country that has signed a Double Taxation Treaty (DTT) with South Africa that provides for a reduced tax rate lower than 20%; and
- Meets the conditions laid down by the applicable DTT to obtain the benefit of the reduced withholding tax rate. For a large majority of the tax treaties in force with South Africa, such a condition is to have a minimum holding of the capital of the distributing company;
- Supranational entities (subject to pre-validation) recognised by the South African authorities as exempt under exemption code Z;
- Foreign entities (subject to pre-validation) exempted from worldwide taxation by virtue of the Diplomatic Immunities and Privileges Act (Act 37/2001) schedules 3 and 4 on the United Nations and its specialised agencies (exemption code Z);
- South African residents that are eligible to claim exemption under exemption codes A-H.
| Eligible beneficial owners | Effective rate of tax after refund a | Tax refund available a |
Residents of Double Taxation Treaty (DTT) countries | Tax treaty rate or 20%, whichever is lower | 20% minus the tax treaty rate b |
Supranational entities | 0% | 20% |
Foreign entities exempted (Act 37/2001) | 0% | 20% |
South African residents as per the exemption codes list | 0% | 20% |
a. Expressed as a percentage of the gross dividend amount.
b. Amount of relief will be 0% if the DTT rate equals or exceeds 20%.
Inward Listed Securities
A quick refund of withholding tax on dividends from Inward Listed Securities is available when paid to:
- Any non-resident beneficial owners under exemption code J;
- South African residents eligible to claim exemption as per section 64E of the South African Income Tax Act under exemption codes A-H.
| Eligible beneficial owners | Effective rate of tax after refund a | Tax refund available a |
Non-resident beneficial owners under exemption code J | 0% | 20% minus the foreign tax rate |
South African residents as per the exemption codes list | 0% | 20% minus the foreign tax rate |
a. Expressed as a percentage of the gross dividend amount.
Beneficial owners who do not disclose themselves will be considered as non-exempt South African residents and tax will be withheld at the maximum corresponding rate.
Documentation requirements
The documentation requirements vary according to the type of equity and the status of the beneficial owner, as follows:
South African Equities
Residents of Double Taxation Treaty (DTT) countries eligible for exemption from withholding tax according to its specific status (for example, pension fund) and provided that this is specified within the DTT:
- One-Time Certificate for South African Equities and Inward Listed Securities;
- Declaration of Exemption from Dividend Withholding Tax DTD(EX) under exemption code Y;
- Per-payment instruction
- Power of Attorney, when applicable.
Residents of DTT countries eligible for a reduced rate of withholding tax as provided by the relevant article in the DTT:
- One-Time Certificate for South African Equities and Inward Listed Securities;
- Declaration for Reduced Rate from Dividend Withholding Tax DTD(RR);
- Per-payment instruction
- Power of Attorney, when applicable.
Supranational entities recognised by the South African authorities and foreign entities exempted from worldwide tax by virtue of the Diplomatic Immunities and Privileges Act (Act 37/2001) schedules 3 and 4 on the United Nations and its specialised agencies:
- One-Time Certificate for South African Equities and Inward Listed Securities;
- Declaration of Exemption from Dividend Withholding Tax DTD(EX) accompanied by the validating supportive documentation, under exemption code Z;
- Per-payment instruction
- Power of Attorney, when applicable.
South African residents that are ligible to claim exemption according to section 64E of the South African Income Tax Act:
- One-Time Certificate for South African Equities and Inward Listed Securities;
- Declaration of Exemption from Dividend Withholding Tax DTD(EX) under exemption codes A-H;
- Per-payment instruction
- Power of Attorney, when applicable.
Inward Listed Securities
Non-residents of South Africa:
- One-Time Certificate for South African Equities and Inward Listed Securities;
- Declaration of Exemption from Dividend Withholding Tax DTD(EX) under exemption code J;
- Per-payment instruction
- Power of Attorney, when applicable.
South African residents that are eligible to claim exemption according to section 64E of the South African Income Tax Act:
- One-Time Certificate for South African Equities and Inward Listed Securities;
- Declaration of Exemption from Dividend Withholding Tax DTD(EX) under exemption codes A-H;
- Per-payment instruction
- Power of Attorney, when applicable.
Form descriptions are presented according to the procedures available for reclaim of withholding tax on income from South African equities.
Deadlines for reclaiming withholding tax
Eligible beneficial owners can apply for a quick refund of withholding tax on dividends from equities issued in South Africa by providing the following:
- The required documentation, in original form, must be provided at the latest 5 business days prior to the last business day of the month following the month of payment, by 10:00 CET;
- The per payment instruction for each quick refund, via SWIFT (formatted MT565), or Xact web portal message, at the latest 5 business days prior to the last business day of the month following the month of payment, by 10:00 CET.
For full formatting requirements of the instruction, customers should refer to:
- The MT564 event notification;
- Tax instruction formats in the CBL Customer Handbook; and
- The Xact via SWIFT User Guide.
The corporate action instruction is a breakdown, per beneficial owner, that must contain all mandatory information as required by the South African Revenue Service (SARS).
When are refunds received?
The estimated time for receiving quick refund is one month from receipt of the documentation.
Customers warrant the completeness and accuracy of the information they supply to Clearstream Banking.
It is the customer’s responsibility to determine any entitlement to a refund of tax withheld, to complete the forms required correctly and to calculate the amount due. Clearstream Banking is under no obligation to carry out any investigation in respect of such information.
With respect to tax reclaims in general, customers are reminded that Clearstream Banking accepts no responsibility for their acceptance or non-acceptance by the tax authorities of the respective country. It is the customer’s responsibility to determine any entitlement to a refund of tax withheld, to complete the forms required correctly and to calculate the amount due.