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HMRC internal manual

Double Taxation Relief Manual

Double Taxation Relief Manual: Guidance by country: South Africa: Dividends: shareholder’s tax

South African non-resident shareholders’ tax was charged on dividends paid by a company which is a resident of South Africa to persons not resident there and was normally deducted from the dividends. However if the paying company, although a resident of South Africa, was incorporated in the United Kingdom, it would not have the legal power, unless expressly authorised by its Articles of Association, to deduct the tax and should bear the tax itself.

In these circumstances, the non-resident shareholders’ tax paid by the company in respect of the dividends (whether or not the tax is actually withheld from the dividends) is accepted as qualifying for credit as a direct tax in computing the liability of the United Kingdom shareholder. The rate of South African tax to be applied to the dividend in determining the amount available for credit is stated on the dividend voucher or in a circular issued to shareholders by paying agents. If the information required is not shown on the dividend voucher the shareholder should produce the circular when making the claim to credit.