ARTICLE · 20 MARCH 2012

Budget Review - 2012 Budget Highlights

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We set out below a summary of the key tax proposals contained in the 2012 budget speech of the Minister of Finance, Pravin Gordhan on 22 February 2012.

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Edward Nathan Sonnenbergs

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We set out below a summary of the key tax proposals contained in the 2012 budget speech of the Minister of Finance, Pravin Gordhan on 22 February 2012.

The budget speech contained a number of important announcements and proposals:

Highlights

The rates of corporate tax and income tax remain the same. However the taxation of dividends has effectively been increased from the current 10% STC to a proposed 15% dividend withholding tax with effect from 1 April 2012. The validity of existing STC credits has been reduced from 5 to 3 years. This surprise announcement may cause reconsideration by corporations of the decision whether or not to defer the declaration and payment of dividends to after 1 April 2012 (which would benefit shareholders who qualify for a broader range of exemptions than is currently the case). Regard should be had to the different rules governing the tax trigger for STC and dividend tax respectively.

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