Enter original profit to see combined company + dividend tax.
Gross Dividend
RÂ 100Â 000,00
Dividend Tax (20%)
RÂ 14Â 600,00
Net Dividend
RÂ 58Â 400,00
Dividends Tax replaced Secondary Tax on Companies (STC) on 1 April 2012. It is a 20% withholding tax on dividends declared by South African resident companies.
The company declaring the dividend withholds the tax and pays it to SARS within the prescribed period. The shareholder receives the net dividend after tax.
Combined with the 27% company tax, the effective tax rate on company profits distributed as dividends is approximately 41.6%.
What is the dividend withholding tax rate?
Dividends Tax in South Africa is 20% on dividends paid by South African companies. It is a withholding tax -- the company withholds it and pays it to SARS on behalf of the shareholder.
Are there any exemptions from Dividends Tax?
Yes. South African companies receiving dividends from other SA companies are generally exempt. Retirement funds, public benefit organisations, and shareholders holding 10%+ (in some cases) may also qualify for exemptions.
What is the combined tax rate on company profits distributed as dividends?
Company tax is 27%, leaving 73% for distribution. Dividends Tax at 20% on 73% = 14.6%. Combined effective rate = 27% + 14.6% = 41.6% on the original profit.
How is Dividends Tax different from income tax?
Dividends Tax is a final withholding tax at a flat 20%. Unlike income tax, it does not vary based on the recipient's total income. The company paying the dividend is responsible for withholding and paying the tax.
How dividends are taxed when companies distribute profits to shareholders
What is the dividend tax rate in South Africa?
Dividends tax is levied at 20% on dividends paid by South African companies. The company withholds this tax before paying the shareholder. If a company declares a R100,000 dividend, R20,000 is withheld for SARS and the shareholder receives R80,000. This rate applies to both listed and unlisted companies.
Who pays the dividends tax?
The shareholder bears the tax, but the company or regulated intermediary (like a stockbroker) withholds and pays it to SARS. For listed shares, your broker handles the withholding. For private companies, the company itself must withhold the tax when declaring dividends and pay it to SARS by the last day of the month following payment.
Are any dividends exempt from dividends tax?
Yes. Dividends between South African companies are exempt if the recipient holds at least 10% of the shares (inter-company exemption). Dividends paid to tax-exempt entities like retirement funds and public benefit organisations are also exempt. Dividends from a Tax-Free Savings Account (TFSA) are completely exempt.
What is the combined tax rate on company profits distributed as dividends?
Company profits are first taxed at 27% corporate rate. The remaining 73% is then subject to 20% dividends tax when distributed. On R1,000,000 profit: R270,000 company tax, leaving R730,000. Dividends tax takes R146,000, leaving R584,000 for shareholders. The combined effective rate is 41.6%.
How do double taxation agreements affect dividends tax?
South Africa has tax treaties with over 80 countries. These treaties can reduce the dividends tax rate for foreign shareholders, typically to 5-15% instead of 20%. For example, the UK treaty reduces the rate to 10% for shareholders holding 10% or more of the company. Foreign shareholders must submit a declaration to claim the reduced rate.
What is the difference between dividends and salary for company directors?
Salary is tax-deductible for the company but taxed at up to 45% for the individual (plus UIF and SDL). Dividends are paid from after-tax profits (27% company tax) but only attract 20% dividends tax. For a director earning R1 million, taking it as salary costs about R360,000 in personal tax. Taking it as dividends costs R270,000 company tax plus R146,000 dividends tax — R416,000 total.
Do I need to declare dividends on my tax return?
Local dividends where tax was correctly withheld do not need to be included in your taxable income — the 20% withholding is the final tax. However, you must still declare them on your ITR12 return for informational purposes. Foreign dividends are different — they must be included in your taxable income and are taxed at your marginal rate, with a credit for any foreign tax paid.
SARS-Aligned: Based on 2025 SARS rates and thresholds. For personal advice, speak to a qualified tax practitioner.
Disclaimer: This calculator provides estimates based on current HMRC rates and thresholds for the 2025/26 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant or tax adviser before making financial decisions. Read our terms
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