Standard refund - eligibility, documentation, deadlines - Equities in South Africa
Who can apply for a standard refund?
Eligible final beneficial owners who did not disclose themselves by providing the proper certification within the respective deadline for exemption/relief at source or quick refund can apply for a standard refund of South African withholding tax.
South African Equities
A standard 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 codes 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, 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, under 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%.
Beneficial owners who do not disclose themselves will be considered as non-exempted South African residents and withheld at the maximum corresponding tax rate.
Inward Listed Securities
A standard 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 who are 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
For all types of beneficial owners:
- Letter of Request to Clearstream Banking for Reclaim of South African Withholding Tax
- Power of Attorney, when applicable
- Full chain of credit advices; and
For residents of Double Taxation Treaty (DTT) countries eligible for exemption from withholding tax according to their specific status and provided that this is specified within the DTT:
- Declaration of Exemption from Dividend Withholding Tax DTD(EX) under exemption code Y.
For residents of DTT countries eligible for a refund of withholding tax as provided by the relevant article in the DTT:
- Declaration for Reduced Rate from Dividend Withholding Tax DTD(RR).
For 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:
- Declaration of Exemption from Dividend Withholding Tax DTD(EX) accompanied by the validating supportive documentation, under exemption code Z.
For South African residents that are ligible to claim exemption according to section 64E of the South African Income Tax Act:
- Declaration of Exemption from Dividend Withholding Tax DTD(EX) under exemption codes A-H.
Inward Listed Securities
For all types of beneficial owners:
- Letter of Request to Clearstream Banking for Reclaim of South African Withholding Tax;
- Power of Attorney, when applicable;
- Full chain of credit advices; and
For non-residents of South Africa:
- Declaration of Exemption from Dividend Withholding Tax DTD(EX) under exemption code J.
For South African residents that are eligible to claim exemption according to section 64E of the South African Income Tax Act:
- Declaration of Exemption from Dividend Withholding Tax DTD(EX) under exemption codes A-H.
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
Required documentation, in original form, must be provided at the latest two months before the statutory deadline, which is three years after payment date.
When are refunds received?
The estimated time for receiving standard refund is three months 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.