A new tax withholding system for non-resident entertainers and sportspeople comes into effect on Tuesday, the South African Revenue Services (Sars) announced on Friday.
”In terms of the new withholding tax system, event organisers, producers and others who make payments to foreign entertainers and sportspersons for performances in South Africa on or after August 1 2006 will have to withhold a 15% tax from these payments,” Sars said.
Previously foreign entertainers and sportspeople were taxed the same as South African residents, but their short stays in the country made this impractical, Sars said.
”It is very fair,” South African boxing promoter Rodney Berman said. ”It is in uniformity with international practice.”
Under the new system, where it is not possible for the withholding tax to be imposed, the foreign entertainer or sportsperson is liable for the payment of the 15% tax.
Sars said that reporting requirements had been introduced to ensure that it was informed beforehand of performances.
A resident who agrees to fund, organise or facilitate a performance for reward is required to notify Sars of the performance within 14 days of concluding the agreement.
The new system was announced in the 2005 Budget and included in the Revenue Laws Amendment Act 2005.
It is also in line with similar decisions taken by other countries.
Foreign entertainers or sportspeople will continue to pay tax on the same basis as other employees if they are: employed by a resident employer; and physically present in the country for more than 183 days in total in a 12-month period that commences or ends in a tax year.
It will be administered by Sars’s non-resident entertainers and sportspersons team. — Sapa