An analysis by ENS Africa, Taxand South Africa
When a South African resident receives a distribution from a foreign subsidiary, it’s crucial to determine if it is a “foreign dividend” or a “foreign return of capital” to understand the tax implications.
Proper classification involves understanding the tax laws of the foreign subsidiary’s country and consulting with advisors, with any misclassification potentially leading to incorrect tax treatment.
Nicolette Smit from ENS Africa, Taxand South Africa, has analysed these two classifications and their implications in more detail here.
For similar content to our Global Guide, subscribe to our mailing list and keep up to date.