The WTI is a tax charged on interest paid, on or after 1 March 2015, by any person to or for the benefit of a foreign person that includes individuals, companies, from a source within South Africa.
The foreign person is responsible for the tax, but the person making the interest payment to or for the benefit of the foreign person must withhold it.
Interest paid is taxed at a final withholding tax rate of 15%.
You must take into consideration when completing taxpayer information during registration and activation of WTI, the personal details and banking details must be the same as the information on the Income Tax registration. Using any other information will result into your registration and activation requested being rejected.
The exemptions relevant to WTI fall into three broad groups:
An amount of interest is exempt if it is paid by:
An amount of interest is exempt if it is paid:
The above exemptions based on the payer and the instrument doesn't require the WTID to be completed and sent to the payor before payment of the interest.
A foreign person is exempt from WTI if:
The payer must keep the WITD for five years as you may be asked to send it to SARS. As with Dividends Tax, SARS prescribes the content of this declaration. It is the responsibility of the payer to make sure that the declaration made by the foreign person is in the form as prescribed.
A reduced rate of tax or exemption can apply under an applicable Agreement for the Avoidance of Double Taxation (DTA). The DTA may reduce the rate South Africa is allowed to charge, or even deny South Africa the right to tax the interest payments. The reduced rates or exemptions under a DTA don’t automatically apply but requires the WITD to be submitted to the payer of the interest prior to payment of the interest.
WTI can only be paid to SARS electronically via eFiling,
A payer must submit the Return for Withholding Tax on Interest, which is a summary of the total of all interest payments, made and tax withheld during a month, to SARS. The WTI form and the payment must be submitted to SARS before the end of the month after the month in which the interest was paid.
Withholding agents may not have their clients’ correct or complete information at the time they withhold the tax. In these cases the withholding agent may need to file a revised return.
The following options may apply:
A revised return for WTI may be needed before or after payment has been made:
For underpayments, the withholding agent only needs to pay the outstanding amount.
For overpayments, the withholding agent may ask SARS for the following:
Withholding agents that have further obligations for WTI, in that withholding agents that expect to pay interest to parties for which WTI must be withheld, may ask SARS to do any of the above. Withholding agents that do not have further obligations for WTI may ask SARS to allocate the overpayment to another tax e.g. income tax, or ask that the overpayment be refunded.
You will need to complete a Claim for Refund out of Revenue from and must bring the following supporting documents at the branch:
All refunds will be released manually, if approved and paid to the bank account where payment came from. If there is an update on banking details, the current process will have to be followed to change the banking details. The withholding agent needs to keep all supporting documents for the revised declaration.