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A dividend is the portion of a company's earnings that is paid out to shareholders in the form of cash or other assets (referred to as an 'in specie dividend').
A company is under no obligation to pay a dividend.
Dividend withholding tax (DWT) has replaced STC (secondary tax on companies) on 1 April 2012 for any dividend that is declared by a company or close corporation to its shareholders or members, respectively.
There are substantial differences in calculating tax on dividends between DWT and the "old" STC method.
Any company declaring dividends to its shareholders must make payment at the end of the month following the month in which the dividend has been declared.
DWT is a tax on dividends received by a shareholder and is a 'withholding' tax.
This means that the entity paying the dividend must subtract the tax from the dividend and withhold the tax before paying the net dividend to the shareholder.