One of the consequences of the South Africa: United States Double Tax Treaty, which is expected to come into effect from January 1, 1998, will be to apply certain limitations on withholding taxes.
Withholding taxes are, in this case, taxes levied by the US government before South Africans receive their money from a US source.
According to KPMG's June 1997 Tax Letter, dividends from the US to South African residents will normally be taxed by the US government at 15 percent, unless the South African individual or company owns more than 10 percent of the voting stock of the company concerned, in which case the withholding tax on dividends will be five percent. Interest paid to South Africans from US sources as well as royalties will not be taxed at all by the US.