Securities Transfer Tax

Securities Transfer Tax

What is securities transfer tax?

Security transfer tax is levied on every transfer of a security . It was implemented from 1 July 2007 under the Securities Transfer Tax Act, No.25 of 2007 and the Securities Transfer Tax Administration Act, No.26 of 2007.

A security means any share or depository receipt in a company, or member’s interest in a close corporation.

What exactly is securities transfer tax levied on?

Every transfer of any security that is issued by a CC or a company incorporated within the country or a company that’s incorporated outside the country but listed on the exchange.

It is also levied on any transfer of securities from a member’s bank restricted, unrestricted and security restricted stock account to a member’s general restricted stock account.

The current rate at which securities transfer tax is levied on is 0.25%.

Why was Securities Transfer Tax created?

The Securities Transfer Tax Act was created to replace to different tax types on securities with a single tax for any transfer of listed and unlisted securities in order to simplify its administration.

Who has to pay Securities Transfer Tax?

The tax applies to who purchases or transfers listed and unlisted securities.

Please take note of the following:

  • When listed securities are purchased or transferred through or from a member, the member is liable for the payment of the tax. That member may recover the tax payable from the person to whom the securities were sold or transferred.
  • The transfer of any other listed security will result in the person to whom the security is sold or transferred, to be liable for the payment of the tax. The tax must be paid by the member that holds the security. If that is not the case, the company which issued the security, must pay the tax.
  • When an unlisted security is transferred, the tax must be paid by the company which issued it. The company may recover the tax from the person to whom they transferred it.

What steps should you take?

  1. When an unlisted security is transferred, the individual must inform the company which issued it within 30 days from the date of transfer.
  2. An electronic declaration must be sent in the form and way the Commissioner has set. This is applicable for the transfer of every security on the SARSe-TT system and it must be sent within the time listed below.
  3. If the securities transfer tax has not been paid in full within the set period, there will be interest charged at the set rate. In accordance with Chapter 15 and 16 of the Tax Administration Act, 2011, a penalty will be applied. This is applicable if any amount remains unpaid after the period or if the taxpayer fails to or makes an incorrect statement on the declaration form.

When should securities transfer tax be paid?

  • If listed securities are transferred, it must be paid by the 14th day of the month following the month during which the transfer occurred.
  • When an unlisted security is transferred, the payment must be made within two moth from the end of the month in which the transfer took place.

How should it be paid?

Securities Transfer Tax can only be paid by an electronic payment. This is done by using the SARSe-STT system.