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Should the WTR01 form be completed even when no withholdings tax on royalties was withheld?

21 April 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: Please advise whether WTR01 forms should be completed for each and every royalty payment, irrespective of whether withholding tax is withheld? According to the website ‘yes’, but according to the SARS officials there’s no need if no withholding tax is withheld.

Should the completed WTRD forms be submitted to SARS? "No”, according to the SARS officials, but according to the website below, it appears to be yes.

A: Looking at the WTR01 form on the below link, there is a note appearing on the top right hand corner of the return, right under "WTR01”. The note states:

"A WTR01 return needs to be completed for each royalty payment made to or for the benefit of the foreign person”

http://www.sars.gov.za/AllDocs/OpsDocs/SARSForms/WTR01%20-%20Return%20for%20Withholding%20Tax%20on%20Royalties%20-%20External%20Form.pdf 

Where no tax was withheld or a lower rate was withheld because of either the application of a DTA or an exemption, the WTR declaration (as shown in the link below) has to be completed by the non-resident and sent to the South African payor of the royalty.

http://www.sars.gov.za/AllDocs/Documents/Withholding%20Tax%20on%20Royalties/WTRD%20-%20Declaration%20Royalties%20-%20External%20Form.pdf 

 The following note also appears on the WTRD:

"In order to qualify for an exemption or a reduced rate referred to above this declaration should be submitted to the person paying the royalty to or for the benefit of the foreign person within the period required by the former (provided it is before the date of payment of the royalty) - failure to do so will result in the full rate of withholding tax on royalties being withheld/payable”

The declaration serves as documentary proof of the validity of either a lower tax rate being applied to the royalty payment or an exemption of the royalty.

My opinion would be to submit the WTR01 even if there was no withholding. The form itself requires one to specify the applicable rate (i.e. as per the DTA or 0% in the case of the exemption). I believe this field would not be on the form if one simply did not have to submit the return where an exemption applies.

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.


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