Securities Transfer Tax (STT)
Also known as: STT, Securities Transfer Tax, Share Transfer Tax.
What is Securities Transfer Tax?
Securities Transfer Tax (STT) is a 0.25% tax on the transfer of listed and unlisted securities imposed by the Securities Transfer Tax Act 25 of 2007. STT is triggered on every transfer of shares, including sales, donations, and certain restructurings, and is administered by SARS under the Tax Administration Act 28 of 2011.
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Attorney & Founder, My-Contracts.co.za · Legal Practice Council of South Africa (LPC F17333)
Definition and context
Securities Transfer Tax (STT) is a transaction-level tax imposed on the transfer of securities — shares in South African companies and members' interests in close corporations — at a flat rate of 0.25% of the taxable amount. It is governed by the Securities Transfer Tax Act 25 of 2007 read with the Securities Transfer Tax Administration Act 26 of 2007 and administered by the South African Revenue Service (SARS) under the Tax Administration Act 28 of 2011. STT replaced Stamp Duty (abolished in 2009) and Uncertificated Securities Tax, consolidating transfer taxation into a single charge.
Section 2 of the STT Act imposes the tax on every transfer of a security; Section 3 defines the taxable amount as the consideration received or, if less than market value or absent (donations, capital contributions), the market value on the date of transfer. Listed-security transfers on the JSE are collected by the central securities depository (Strate) at the point of settlement — the broker withholds and remits STT automatically. Unlisted-security transfers are self-assessed: the company secretary or transferee must file an STT declaration (Form STT-201) within one calendar month of transfer and pay the tax to SARS. Liability rests primarily on the company in which the securities are held (the "issuer"); Section 8 provides an indemnity right against the transferee.
Key exemptions under Section 8 include intra-group transfers qualifying for Section 42 asset-for-share rollover relief under the Income Tax Act 58 of 1962 (SARS roll-over approval required); share buy-backs by the issuer itself (being a cancellation rather than a transfer); transfers between spouses in community of property; transfers to approved pension funds and public benefit organisations; Section 41-47 corporate restructuring transactions; and transfers under an amalgamation of the issuer. Cross-border transfers of shares in South African companies remain subject to STT regardless of the transferee's residence — a frequent trap for foreign acquirers. Non-payment attracts SARS penalties of up to 200% under the Tax Administration Act plus interest at the prescribed rate; directors may also face personal liability under Section 184 of the Tax Administration Act for the company's unpaid STT.
Where this term lives in law
Income Tax Act 58 of 1962
Sections: 42, 44, 45, 46
The principal statute governing the taxation of individuals and companies in South Africa.
Tax Administration Act 28 of 2011
Sections: 184, 222, 223
Governs the administration of tax laws by SARS, including tax-clearance status and compliance.
Frequently asked questions
What is the rate of Securities Transfer Tax in South Africa?
STT is charged at 0.25% of the taxable amount under Section 2 of the Securities Transfer Tax Act 25 of 2007. The taxable amount is the consideration received on transfer or, where less than market value or no consideration passes (donations, capital contributions, family transfers), the market value of the securities on the date of transfer.
Who pays STT on an unlisted share transfer?
Under Section 6 of the STT Act, liability rests primarily on the company whose securities are transferred (the "issuer"). The issuer must file the STT declaration (Form STT-201) and pay SARS within one calendar month of transfer. Section 8 gives the issuer an indemnity right against the transferee, and in practice share-sale agreements contract for the transferee to bear the STT — but SARS looks to the issuer first if the tax is unpaid.
Are intra-group share transfers subject to STT?
Intra-group transfers qualifying for Section 42 asset-for-share rollover relief under the Income Tax Act 58 of 1962 are exempt under Section 8 of the STT Act — provided SARS rollover approval is obtained and the statutory conditions are met. Transfers that do not qualify (for example where the acquiring entity is not a resident, or where consideration falls outside the rollover rules) remain subject to STT at 0.25%.
Is STT payable on a share buy-back?
No. A share buy-back by the issuer is a cancellation of shares, not a transfer, and is outside the scope of STT. However, the buy-back itself must satisfy Section 48 of the Companies Act 71 of 2008 (including special-resolution approval where it exceeds 5% of issued shares) and the solvency-and-liquidity test under Section 46. Buy-backs can have dividends-tax implications under the Income Tax Act that require separate consideration.
Contract templates using this term
3 templates reference Securities Transfer Tax (STT).