entertainers
28 July 2006
Pretoria â A new withholding tax system will come into effect from 1 August
2006 for entertainers and sportspersons who are not resident in South Africa
for income tax purposes.
Previously foreign entertainers and sportspersons were taxed on income
derived from their performances in South Africa on a similar basis to South
African residents. This system proved to be impractical in light of their very
short stays in the country.
In terms of the new withholding tax system, event organisers, producers and
others who make payments to foreign entertainers and sportspersons for
performances in South Africa on or after 1 August 2006 will have to withhold a
15 percent tax from these payments.
Where it is not possible for the withholding tax to be imposed, the foreign
entertainer or sportsperson is liable for the payment of the 15 percent
tax.
Reporting requirements have been introduced to ensure that the South African
Revenue Service (SARS) is informed beforehand of performances. A resident who
agrees to found, organise or facilitate a performance for reward, is required
to notify SARS of the performance within 14 days of concluding the
agreement.
The withholding tax system was announced in the 2005 budget and included in
the Revenue Laws Amendment Act, 2005. It takes effect on 1 August 2006 in terms
of a proclamation by the President to be published in the Government Gazette on
Friday, 28 July 2006.
The withholding tax system is not intended to give an unfair advantage to
foreign entertainers and sportspersons who are employed for extended periods of
time.
Foreign entertainers or sportspersons will, therefore, continue to pay tax
on the same basis as other employees if they are:
* employed by a resident employer
* physically present in the country for more than 183 days in total in a
12-month period that commences or ends in a tax year.
The withholding tax system is consistent with international practice and the
agreements for the avoidance of double taxation that South Africa has concluded
with other countries. It will be administered by SARSâ non-resident
entertainers and sportspersons team. The team may be contacted as follows:
Post: Private Bag X187, Rivonia
E-mail: nres@sars.gov.za
Facsimile: (011) 602 2934/2128
Telephone: (011) 602 4907/3008
Further details of the withholding tax system are to be found on page 100 of
the Revenue Laws Amendment Act, 2005 and page 35 of the explanatory memorandum
to the Revenue Laws Amendment Bill, 2005. Both documents are available under
the legislation section on the SARS website, http://www.sars.gov.za
For further enquiries contact:
Adrian Lackay
SARS Communications
Tel: (012) 422 4206
Cell: 083 388 2580
Issued by: South African Revenue Service
28 July 2006
