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The income tax system in South Africa currently allows for the tax-free repatriation of foreign dividends to South Africa, if the South African shareholder receiving the dividends holds a minimum of 20% of the total equity share capital and voting rights of the foreign company making the dividend distribution. This type of dividend exemption is known as the “participation exemption”. As the profits from the sale of shares merely represents retained dividends, this participation exemption exists alongside the tax-free sale of foreign shares by a South African resident holding at least 20% of the equity share capital in a foreign company.