We all need to pay our taxes, else the state will be underfunded and will be unable to deliver or perform.
So the dividend withholding tax (DWT) warrants no more than cursory attention.
Having long been flagged by the state as a 10% tax, it starts (next week) at 15%. That is 50% higher than expected - or is it?
Lets take a look:-
STC @ 10% DWT @ 15%
Profit available for distribution 110 000 110 000
Dividend declared 110 000 110 000
STC Cost /DT Cost 10 000 16 500
Dividend received by Shareholder 100 000 93 500
Shareholder worse off by ------ 6 500 (65%)
Now of course, the SARS account is worse off by the STC, but the net effect is harsh.
I wonder what the longer term effects will be?
A must-read in this area is Ivo vegter's piece http://dailymaverick.co.za/opinionista/2012-03-27-tax-why-align-with-most-other-countries
If you have read any Vegter, you would be unsurpised by his tone or content. An example:-
"More generally, taxing something discourages it. You tax smoking or drinking when you want less of it."