What is withholding tax?
Withholding tax (WHT) is a tax payable to the government by the payer of an income stream rather than by the recipient of the income. This means the tax is withheld or deducted from the income paid to the recipient, rather than paid directly by the recipient. Where the recipient is resident in a different country to the payer, this often leads to double taxation.
In most jurisdictions, withholding tax applies to passive-type income such as dividends, interest, and royalties, and is often reduced where there is a tax treaty (or double taxation agreement) in place between the country where the payer is resident and the country where the recipient is resident.
However, many African countries levy high WHT on a broad range of payments, including services and management fees. Each country has its own rules, procedures and documentation requirements, which can change regularly. Language barriers also exist, and often relief under tax treaties is not taken into account, and the capacity to reclaim the tax in the home country can be limited.
These factors can lead to higher than necessary WHT being deducted and less double taxation relief being claimed, which create a significant additional cost to doing business in Africa.
Who we are
Regan van Rooy specialises in African tax issues. We have exceptional African expertise and resources, with a strong network covering all African countries. We are the market leader in facilitating WHT reclaims and WHT planning across the African continent.
Our team has senior advisory, governmental and industry backgrounds, so we understand the diverse operating environments of the African continent and provide pragmatic, business-focused, responsive and cost-effective solutions. We will work with you to understand your unique business drivers in the countries where you operate in order to provide flexible, tailor-made solutions to fit your needs.
How we can help you
We offer a full range of WHT services to suit your needs:
- We can take over the full WHT reclaim process on a success fee basis;
- We can assist you with specific country challenges, disputes, or documentation gaps;
- We can review your WHT charges to ensure the correct rates are being deducted and correct any over-charges;
- We can facilitate your double taxation relief claims in your home country;
- We can work with you to implement processes and systems within your business to facilitate the correct deduction and documentation of WHT in your African subsidiaries;
- We can work with you to optimise your structure and transactions from a general tax and WHT perspective, including the relevant transfer pricing support.
The African withholding tax framework is extremely complex, let us help you navigate it.
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How can we help?
How you structure your business is a critical question as you expand globally. The right structure will protect your assets, improve your currency position, support your business operations, facilitate future business expansion and changes, and optimise your overall tax rate. Trying to unscramble a sub-optimal structure entered into in haste or without full consideration of relevant facts is complex and expensive, so it’s important to plan upfront.
Structuring an international business is both a science and an art – this is our specialist area of expertise. Regan van Rooy is an international tax and structuring advisory firm focussing on Africa. We have offices in South Africa, Mauritius and Ireland and we can help you with any international tax or structuring query.