‘Withholding taxes does not aid foreign direct investment’


Tax bolstering measures could potentially remove tax relief currently afforded to South African companies on service income received from outside South Africa, and this could negatively impact foreign direct investment into South Africa.

this according to David Warneke, a Director and Head of Tax Technical with BDO South Africa in an article on the company’s website.

He says the Income Tax Act currently provides for a rebate with respect to foreign taxes withheld by a foreign government on income sourced in South Africa.

“It is understood that certain companies were abusing the relief measure, which inevitably led to the proposal to remove the provision. However, the removal of this relatively unique provision will result in increased costs for South African companies as they will no longer be able to claim this rebate.”

Read the article here.