South Africa’s withholding tax rates for 2025 remain unchanged, providing stability for international transactions. Key rates include:
From 14 May 2025, SARS introduced online systems for filing withholding tax on royalties and interest, simplifying compliance. Double Taxation Agreements (DTAs) may reduce these rates or offer exemptions, but declarations must be submitted in advance. Missing deadlines can result in penalties or interest charges. Businesses should utilize comprehensive business solutions to ensure accurate filing and timely payments to avoid these risks.
Withholding tax is a system where tax is deducted at the source on income earned in South Africa and paid to foreign recipients. In this setup, the payer acts as the withholding agent, ensuring tax is collected before the funds leave South Africa. This approach primarily applies to income earned within the country by foreign individuals or entities who may not be registered for local income tax. It’s a key mechanism aimed at regulating cross-border transactions.
This method plays a crucial role in preventing revenue loss. Without it, the South African Revenue Service (SARS) would face challenges in collecting taxes from non-residents once the money exits the country. For example, interest withholding tax was introduced in March 2015, and the dividends withholding tax rate was raised from 15% to 20% in February 2017. Both measures ensure that taxes are collected upfront, reducing reliance on voluntary compliance from foreign recipients.
For the 2025/2026 tax year, there were no changes to the standard withholding tax rates. The rates remain as follows: 15% for interest and royalties, and 20% for dividends. The Budget announcement on 12 March 2025 confirmed this consistency, offering stability for businesses managing payroll in South Africa and handling international payments.
However, SARS has introduced updates to streamline compliance. From 14 May 2025, taxpayers can use the SARS Online Query System (SOQS) to submit Withholding Tax on Royalties declarations and supporting documents online, available 24/7. Meanwhile, interest exemption thresholds for South African residents remain unchanged: R23,800 for individuals under 65 and R34,500 for those aged 65 and above.
The rules for withholding tax differ based on whether the taxpayer is a South African resident or a non-resident.
South Africa 2025 Withholding Tax Rates by Payment Type
South Africa imposes withholding tax on various payments made to non-residents. Below is a detailed look at how these payments are taxed. It's worth noting that Double Taxation Agreements (DTAs) may offer reduced rates depending on the specifics of the agreement. Knowing the applicable rate is vital for ensuring accurate tax compliance.
Dividends are subject to a 20% withholding tax. This rate has remained steady following the 12 March 2025 Budget announcement. Non-residents may benefit from lower rates if a DTA exists between South Africa and their country of residence.
Interest payments attract a 15% final withholding tax.
However, non-residents may qualify for exemptions under certain conditions or treaty benefits, as previously outlined.
Royalties paid to foreign recipients are taxed at a 15% withholding rate. This applies to payments for the use of intellectual property, sharing of scientific or technical knowledge, or related assistance. The withholding agent must file a Return for Withholding Tax on Royalties (WTR01) and make the payment to SARS by the end of the following month.
Since 14 May 2025, taxpayers can submit royalty declarations and supporting documents online through the SARS Online Query System (SOQS), available 24/7. To claim a reduced rate under a treaty, foreign recipients must submit a declaration form (e.g., the WTRD) to the withholding agent before payment.
Foreign sportspersons and entertainers performing in South Africa face a 15% final withholding tax. This tax is considered final, meaning no additional South African tax obligations typically arise from these earnings. The event organiser or promoter, acting as the withholding agent, is responsible for deducting and remitting this tax to SARS.
Non-resident individuals selling South African immovable property valued above R2 million are subject to a 7.5% tax on the transaction value.
The table below summarises the rates and key conditions for these payment types:
| Payment Type | Standard Rate | Key Conditions |
|---|---|---|
| Dividends | 20% | Reduced rates available via DTAs |
| Interest | 15% | Exempt if recipient is absent from SA for ≥ 183 days and has no fixed place of business |
| Royalties | 15% | Rate may be reduced under DTAs |
| Sportspersons/Entertainers | 15% | Final tax on payments for activities in South Africa |
| Immovable Property Disposal | 7.5% | Applies to non-residents for property > R2 million |
All returns and payments to SARS must be submitted by the end of the month following the transaction. If the deadline falls on a weekend or public holiday, you’ll need to file by the last business day before it. For withholding tax on interest (WTI), you’ll need to file Form WT002 electronically using the SARS eFiling platform. For royalty payments, Form WTR01 must be submitted along with proof of payment.
Withholding agents are also required to issue an IT3(b) certificate (Certificate of Income from Investments, Property Rights, Royalties, and WTI) to both the foreign payee and SARS. Additionally, an annual reconciliation summary must be provided, outlining all withholding tax payments and identifying the individuals or entities from whom tax was withheld. Missing these deadlines can result in penalties ranging from £250 to £16,000 per month until the filing is complete. Late payments may also attract interest charges at the prescribed rate. SARS reserves the right to raise assessments for non-submission within five years - or longer if fraud is suspected.
These deadlines highlight the importance of utilising treaty benefits, which are outlined below.
Foreign recipients may be eligible for reduced tax rates or full exemptions under Double Taxation Agreements (DTAs). To claim these treaty benefits, it’s crucial to submit the required declarations on time. For royalty payments, the foreign recipient must complete a Withholding Tax on Royalties Declaration (WTRD) and provide it to the withholding agent before payment. Withholding agents must retain this declaration for five years, as SARS may request it during audits. Similar conditions apply to interest payments.
For businesses entering or expanding in South Africa, navigating these compliance requirements can be complex. Seeking expert guidance can simplify the process. Platformics offers tailored support to ensure SARS reporting and compliance obligations are met, helping businesses stay on track with local tax regulations.
The table below provides a quick-reference summary of the 2025 withholding tax rates, organised by payment type. These rates, confirmed by SARS in March 2025 following the Budget Tax guide announcement, have not changed. It serves as a complement to the detailed breakdown of payment types covered earlier.
| Payment Type | Taxpayer Classification | 2025 Withholding Rate |
|---|---|---|
| Dividends | Residents & Non-residents | 20% |
| Interest | Non-residents | 15% |
| Interest | Residents | Included in taxable income (after exemptions) |
| Royalties | Non-residents (Foreign persons) | 15% |
| Foreign Dividends | Residents (Individuals, <10% shareholding) | Maximum 20% |
Important Note: Residents enjoy annual interest exemptions of R23,800 for individuals under 65 and R34,500 for those aged 65 and over. Non-residents, however, do not benefit from these exemptions. Additionally, Double Taxation Agreements may lower these standard rates. To avoid overpaying tax, foreign recipients should ensure they complete the necessary declarations to claim treaty benefits before any payments are made.
In 2025, South Africa's withholding tax rates remain unchanged at 20% for dividends and 15% for both interest and royalties. To make compliance easier, SARS now provides around-the-clock remote filing through its Online Query System (SOQS). These consistent rates, combined with improved digital tools, highlight the critical need for businesses to stay on top of their tax obligations.
For cross-border transactions, which often involve banking for foreign companies, South African payers are required to deduct and remit taxes by the end of the month following each transaction. Failing to meet this deadline can result in penalties.
Double Taxation Agreements can ease tax liabilities, but only if the necessary declarations are submitted correctly. Withholding agents are also required to retain all relevant records for five years.
Staying compliant in such a landscape requires reliable systems. Tools like Platformics offer comprehensive solutions by integrating accounting, payroll, and compliance management. Efficient tax management not only helps businesses avoid penalties but also ensures smoother cross-border operations, fostering growth into 2025 and beyond.
Double Taxation Agreements (DTAs) enable South Africa to modify the standard 15% withholding tax on payments such as interest, royalties, and dividends when these payments are made to residents of countries with which South Africa has a tax treaty. These treaties can lower the withholding tax rate - for example, reducing it to 10% or even 5% for specific royalties - or, in certain cases, completely waive it for eligible recipients.
To apply a DTA, the South African payer must secure a valid residency certificate from the foreign recipient and use the tax rate specified in the treaty. If this process is not followed, the default 15% withholding tax will apply. DTAs play a crucial role in minimising tax burdens on international transactions, making them an important factor for businesses engaged in cross-border operations.
Withholding tax on royalties is applicable to any royalty payments originating from a South African source and made to a foreign recipient. The payer, acting as the withholding agent, is responsible for deducting the tax directly at the source and submitting it to SARS. Starting from 14 May 2025, the required return (WTR01) and supporting documents can be submitted online through SARS's Online Query System (SOQS), removing the need for in-person visits.
When it comes to withholding tax on interest, a 15% rate is applied to interest payments made to non-residents, unless exemptions or tax treaty relief are in place. Payers are required to deduct this tax and submit it electronically via eFiling. Additionally, a monthly summary return (WT002) must be filed, detailing all interest payments and the tax withheld. This return, along with the payment, is due by the end of the following month - or the last business day if the due date falls on a weekend or public holiday. Certain exemptions may apply, such as when the recipient has been physically absent from South Africa for at least 183 days in the past year and the debt is not tied to a South African permanent establishment.
Platformics provides support in setting up accounting and payroll systems, filing the necessary returns, and ensuring compliance with SARS regulations for withholding tax on both royalties and interest.
In South Africa, missing the deadline for withholding tax payments can have serious repercussions. According to the South African Revenue Service (SARS), both the WT002 return and the tax payment must be submitted by the end of the month following the one in which the payment - such as interest, dividends, or royalties - was made. If you miss this deadline, you could face penalties and daily interest charges on the outstanding amount, which can add up quickly and increase your financial burden. Beyond the monetary impact, late submissions can harm your compliance record, potentially triggering audits, restrictions on tax clearances, or even legal proceedings.
For businesses, particularly non-residents or multinational groups, staying compliant is absolutely essential. This is where Platformics steps in. They provide a reliable solution to manage your withholding tax obligations, from accurately calculating rates to filing returns electronically and ensuring payments are made on time. By simplifying the process, Platformics helps safeguard your business from penalties and keeps your compliance status intact with SARS.
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