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South Africa Issues Ruling On Termination Of STC Credits

by Lorys Charalambous, Tax-News.com, Cyprus

02 February 2015


The South African Revenue Service has issued a draft binding general ruling, which clarifies that credits carried forward from the secondary tax on companies regime may not be used when a dividend is declared before April 1, 2015, if dividends tax is paid on or after that date.

The former STC was applied at the company level but was replaced, with effect from April 1, 2012, by the present dividends tax, which involves the withholding of tax, subject to exemptions, from dividend distributions to shareholders.

Transitional rules for the move from the STC system to the dividends tax regime were agreed. Taxpayers with pre-existing STC credits were allowed to use them to reduce the taxable amount for the calculation of dividends tax liability for a period of up to three years (that is, until April 1, 2015).

Any comments to SARS on the draft ruling are requested by February 20, 2015.

TAGS: South Africa | compliance | tax | business | tax compliance | revenue guidance | corporation tax | tax credits | tax authority | dividends | Africa | Tax

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