The 2017 Budget Speech delivered by Minister Gordhan on 22 February 2017 increased the rate of Dividends Withholding Tax (DWT) from 15% to 20%.
The Draft Rates and Monetary Amounts and Amendment of Revenue Bill that was published on the same day confirms that the new rate will be deemed to have come into operation on 22 February 2017 and will apply in respect of any dividend ‘paid’ on or after that date. The 22 February 2017 effective date is also contained in Chapter 4 of the supporting documents that accompanied the 2017 Budget Speech.
The pressing question for a number of taxpayers is whether dividends which were declared prior to 22 February 2017 but have not yet been paid to shareholders will attract DWT at the higher rate. The answer to this question rests on the meaning of ‘paid’ in the context of the DWT provisions.
The DWT provisions distinguish between dividends paid by listed and unlisted companies.
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