In Summary
  • The tax — which is mainly charged on professional fees, royalties, dividends and interest — is currently set at 20 per cent but PwC argues the rate is too high.
  • PwC reckons that imposing the tax on amounts will be double taxation because the same firms or individuals are also expected to pay tax in home countries.

Withholding tax on foreigners should be scrapped or drastically slashed under a reformed Income Tax Act, PricewaterhouseCoopers (PwC) has recommended.

The tax — which is mainly charged on professional fees, royalties, dividends and interest — is currently set at 20 per cent but PwC argues the rate is too high.

In the Budget Policy Statement (BPS) for 2018/19, the Treasury has proposed to have Income Tax Act reviewed by mid this year, ahead of the start of next fiscal year.

PwC reckons that imposing the tax on amounts will be double taxation because the same firms or individuals are also expected to pay tax in home countries.

It notes the levy applies well for local residents because it is considered to be advance tax so that the taxpayer only meets the difference (that has not been paid) by the end of the year.

“The withholding tax that is imposed on non-residents ought to be removed or reduced by a big margin to remove the element of double taxation,” said Titus Mukora, a tax partner with PwC.

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