Earned dividends from a foreign company? Most foreign dividends paid to South African residents are not fully taxed. Our free SARS foreign dividends tax calculator works out the taxable portion of your foreign dividends for the 2026 tax year (1 March 2025 – 28 February 2026) by applying the section 10B(3) exemption, so you know exactly what to declare to SARS and what gets added to your taxable income.
Foreign dividends are taxed under section 10B of the Income Tax Act. First, section 10B(2) gives a full ("participation") exemption: if you (alone, or together with other companies in the same group where you are a company) hold at least 10% of the equity shares and voting rights in the foreign company, or the dividend is on a share listed on the JSE, the whole dividend is exempt. If neither applies, section 10B(3) gives a partial exemption. For a natural person, deceased or insolvent estate, or trust, an amount equal to 25/45 of the foreign dividend is exempt, which leaves 20/45 (about 44.44%) to be included in your taxable income. Because the top marginal rate is 45%, the maximum effective rate on a fully-taxed foreign dividend is 20% (45% × 20/45). You must declare the full gross dividend on your return; SARS applies the exemption automatically. No deduction is allowed for expenses incurred to produce the foreign dividend.
Section 10B foreign dividend treatment (individuals, 2026 tax year)
| Scenario | Treatment |
|---|---|
| Shareholding ≥ 10% of equity shares & voting rights (s10B(2)) | Fully exempt |
| Share listed on the JSE (s10B(2)) | Fully exempt |
| Otherwise, partial exemption (s10B(3)) | 25/45 exempt; 20/45 (≈44.44%) included in taxable income |
| Maximum effective tax rate | 20% (45% top marginal rate × 20/45) |
| Deductions for expenses to produce the dividend | Not allowed |
The included portion (20/45 of the dividend) is added to your other taxable income and taxed at your marginal rate using the 2026 individual tax brackets (18%–45%). The 25/45 ratio has applied since 1 March 2017 (the 2018 year of assessment); before that it was 26/41.
2026 tax year example. Thandi, a South African resident, receives R50,000 of dividends from a US company in which she holds less than 10% of the shares (not JSE-listed). Section 10B(2) does not apply, so section 10B(3) gives a partial exemption: 25/45 × R50,000 = R27,778 is exempt, and 20/45 × R50,000 = R22,222 is included in her taxable income. If her marginal rate is 36%, the tax on this dividend is 36% × R22,222 ≈ R8,000, an effective 16% on the R50,000. Someone on the 45% top rate would pay the maximum 20% (R10,000).
For an individual, deceased or insolvent estate, or trust, 25/45 of the foreign dividend is exempt under section 10B(3) and 20/45 (roughly 44.44%) is included in your taxable income. That included portion is then taxed at your marginal rate, giving a maximum effective rate of 20%.
The maximum effective rate is 20%. Because only 20/45 of the dividend is included in taxable income and the top marginal rate is 45%, the highest possible tax is 45% × 20/45 = 20%. If your marginal rate is lower, your effective rate on the foreign dividend is proportionally lower.
Yes. Under section 10B(2) a foreign dividend is fully exempt if you hold at least 10% of the equity shares and voting rights in the foreign company (the participation exemption), or if the dividend is paid on a share listed on the JSE. In those cases none of the dividend is added to your taxable income.
Yes. You must declare the full gross foreign dividend on your ITR12 return, even if it is fully or partly exempt. SARS then applies the section 10B exemption automatically. You also declare any foreign tax withheld, which may qualify as a foreign tax credit against your SA tax.
No. The Income Tax Act specifically disallows any deduction for expenditure incurred in the production of foreign dividend income. You are taxed on the included portion (20/45 of the gross dividend) with no offset for interest, fees or other costs relating to the foreign investment.
Yes. The section 10B(3) ratio for individuals, estates and trusts has been 25/45 since 1 March 2017 (the 2018 year of assessment). Before that date it was 26/41. The 25/45 ratio applies for the 2026 tax year (1 March 2025 – 28 February 2026) covered by this calculator.
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