THE South African Revenue Service (SARS) will on Friday start receiving electronic submissions on the country's new dividend withholding tax through its e-filing system.
The last returns relating to the old secondary tax on companies (STC) in respect of dividends declared before March 31 will have to be submitted and any tax paid by next month, the South African Institute of Chartered Accountants has warned.
"Any company declaring a dividend should be fully aware of its STC credits, the portion of the declaration that is a return of capital and the status of its shareholders," the institute said in a statement.
Experts at a tax dialogue presented by PwC, the professional services firm, in Johannesburg recently warned that companies could be inundated with refund requests for the next two to three years as shareholders forget to indicate their exempt status from the new tax.
The dividend withholding tax replaced the STC on April 1, and while companies had had several years to prepare for it, many were still not ready, said Kyle Mandy, head of PwC's national tax technical team.
The dividend withholding tax will be taxed in the hands of the beneficial owner of the shares at 15%, which will be paid to SARS by the company, acting as its withholding agent.
Exempt shareholders include South African companies, the government, public benefit organisations and retirement funds.
Most listed entities have appointed regulated intermediaries to update their shareholder registers, distribute dividends to shareholders and keep track of exempt shareholders.
Christo Landman, head of tax at Liberty Life, said the new tax brought with it an additional strain as companies would have to allow for refunds due to shareholders' neglect in declaring their tax-exempt status.
He said the information requested for the declaration was not always readily available and companies were only now realising the amount of uncertainty around the transition to the new tax.
Elandre Brandt, partner at PwC, said some taxpayers would forget to declare their tax-exempt status or fail to do so in time. They will be taxed at 15% and, to claim a refund, companies or regulated intermediaries will have to hold back some of the tax to be paid to SARS to refund the shareholders.
A private company will only be able to reduce the next payment to SARS in the following year, causing taxpayers to wait a year for their refunds, Mr Brandt said.
Mr Mandy said the Organisation for Economic Co-operation and Development had issued a discussion document on beneficial ownership as there still existed uncertainty in dealing with beneficial ownership in entities such as discretionary trusts and hedge funds.
Mark Kingon, general manager for operations support at SARS, said companies and regulated intermediaries would file the declarations through the e-filing system, with the first dividend tax payments due at the end of May.
He said in the next round of declarations sought by SARS, companies and regulated intermediaries would have to indicate exactly who the recipients of dividends were.
Mr Mandy said this would allow SARS to compare the declarations with the shareholders' income tax returns.
SARS said people who were subject to the dividend withholding tax but not required by law to register for income tax purposes because they earned below the tax threshold would not have to register as taxpayers.