South Africa's open for business

By Jane Hivey, tax consultant for Cassons.

Companies establishing a business presence in South Africa should consider if they wish to trade via a branch or a subsidiary company.

This meant that dividends were effectively taxed twice — once on the company in South Africa and again in the home country of the recipient.

This was intended to level the playing field with companies that were being taxed on dividends as well as profits, but it actually served to deter inward investment.

It now follows the international ‘norm’ of withholding tax applying to dividends. This is now borne at the recipient level, allowing international investors to claim relief from double taxation.