Tax watch

The issue of bonus shares to shareholders has been included in the defi nition of dividends.

This therefore means that where a company issues bonus shares to its shareholders out of the company’s accumulated distributable reserves, the bonus shares will be treated as a dividend and withholding tax will be due and payable.

This change in the tax law is likely to affect in the near future many insurance companies that are required to raise their minimum paid up capital in order to comply with the new requirements of the Insurance Amendment Act 2011.