What is the dividends tax rate in South Africa?

# What is the Dividends Tax Rate in South Africa? The **dividends tax rate in South Africa is 20%** for any dividend paid on or after 22 February 2017. This rate applies to dividends received by individuals from South African companies. ## Who Pays Dividends Tax? **Individuals:** Pay 20% dividends tax on dividends received from South African companies. While dividends are generally exempt from income tax, the 20% dividends tax is withheld at source. **Companies:** South African resident companies are **exempt** from dividends tax when receiving dividends from other South African companies. **Retirement funds:** Pension funds, provident funds, and other approved retirement funds are exempt from dividends tax. ## Key Exemptions Several beneficial owners are exempt from the 20% dividends tax: - **South African resident companies** receiving dividends from SA companies - **Retirement funds** (pension, provident, preservation funds) - **Public benefit organisations** with approved tax-exempt status - **Certain government institutions** ## How Dividends Tax Works The dividends tax operates as a **withholding tax system**: 1. **Automatic deduction:** The paying company withholds 20% before paying dividends 2. **No additional tax:** Individuals don't pay further income tax on dividends received 3. **Final tax:** The 20% rate is the final tax liability on dividend income ## Foreign Dividends For **foreign dividends** received by South African residents: - Full amount must be declared on tax returns - Only **44.4%** (20/45) of foreign dividends are taxable - Subject to normal income tax rates, not the 20% dividends tax ## Reporting Requirements From the 2025 filing season, SARS introduced new source codes to simplify reporting of exempt dividends. Previously exempt dividends no longer need detailed reporting to SARS. Managing dividends tax calculations and compliance deadlines across multiple clients can be complex. WeekdayApp's automated compliance tracking helps accounting practices stay on top of all tax obligations, including dividends tax reporting, starting at R199/user/month. ## Important Dates The dividends tax rate increased from **15% to 20%** effective 22 February 2017, regardless of the dividend declaration date. This rate remains current for the 2024-2025 tax year.