South Africa-Kuwait protocol ratified by Kuwait
Protocol would eliminate exemption from South Africa’s 20% dividends tax
Kuwait on September 18, 2024, ratified the protocol to the South Africa-Kuwait income tax treaty, which was signed by the governments of South Africa and Kuwait on December 17, 2019, and April 1, 2021, respectively.
The protocol would eliminate the exemption under the existing South Africa-Kuwait treaty from South Africa’s 20% tax on dividends paid by South African companies (and on certain dividends paid by foreign companies that are listed on a South African exchange) and instead limit the rate at which South Africa may impose dividends tax on Kuwaiti shareholders to:
- 5% if the beneficial owner is a company which holds at least 10% of the capital of the company paying the dividends
- 10% on all other cases
The current exemption also extends to eligible Dutch and Swedish shareholders through the so-called “most favored nation” clauses in South Africa’s income tax treaties with the Netherlands and Sweden. The change under the protocol thus would also amend the rates at which Dutch and Swedish shareholders will be subject to South African dividends tax.
Although the protocol will only come into force once it has been ratified by the South African parliament and duly published in the government gazette, and the relevant documents (instruments of ratification) are exchanged between the Kuwaiti and South African governments, it is anticipated that these procedures will be concluded swiftly.
Read an October 2024 report prepared by the KPMG member firm in South Africa