Foreign Dividends received from a non–resident company are taxable.
Foreign dividends are, however, exempt as follows:

• If received by a resident who holds at least 10% of the equity shares in the foreign company
• The shareholder is a company which is in the same country as the foreign company paying the dividend
• If declared by a company listed on the SA stock exchange
• If paid out of the profits of a foreign company if the profits of the foreign company have been included in the South African shareholder’s income in terms of the CFC provisions

Where a foreign dividend is not exempt in terms of the provisions above the following part of a foreign dividend will be exempt from tax:

• Individuals and trusts: 25/45 or 56% of the foreign dividend received.
• Companies: 8/28 or 29% of the foreign dividend received.

No deduction will be granted for any expenditure incurred in the production of income in the form of foreign dividends.