Treasury acting fast on dividends tax to prevent avoidance

01 March 2017 - 18:02 By Linda Ensor
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TOUGH TALK: Ismail Momoniat warns that the National Treasury will close loopholes
TOUGH TALK: Ismail Momoniat warns that the National Treasury will close loopholes
Image: Business Times

The immediate implementation of the withholding tax on dividends the day after the Budget announcement last week was a "strong measure" but necessary to prevent tax avoidance‚ Treasury deputy director general Ismail Momoniat said Wednesday.

Finance Minister Pravin Gordhan announced an increase from 15% to 20% in the withholding tax on dividends in his budget last Wednesday to take effect immediately the following day.

The tax increase will bring in an additional R6.8 billion for the fiscus.

Treasury director of personal income tax Chris Axelson said for listed companies‚ the tax increase would be applied to dividends that were paid after the implementation date even if they were declared beforehand.

Axelson also highlighted the fact that the scope for tax avoidance was very large‚ especially in small and medium sized businesses.

- TMG Digital/BDLIVE

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