The South African Revenue Service has issued a draft interpretation note on the application of the withholding tax imposed on royalties in terms of sections 49A to 49H of the Income Tax Act.

The withholding tax on royalties applies to royalties paid by a resident to a non-resident for the use of intellectual property belonging to the non-resident. Like other withholding taxes, withholding taxes on royalties can potentially be reduced or eliminated by a tax treaty between the states of the contracting parties. Comments are due by 21 April 2017.