As an Investor in the US markets, you'll need to complete an electronic declaration form called W-8BEN. This allows you to pay a lower Dividend Withholding Tax (“DWT”) when you receive dividends from a source within the US, and you are not a US tax resident.
The form will appear on your screen once you log into your USD account.
Who can complete the W-8BEN
Non-US citizens invested in the US who have already received dividends from any US-listed company but haven’t declared them yet.
What happens if you do not declare using the W-8BEN form?
Instead of paying a reduced tax amount, you will be liable for Dividend Withholding Tax (DWT) at the maximum rate of 30%.
Below are the Steps to complete your W-8BE form
Steps for Individuals to complete the W-8BEN declaration
Once you log in to your account, as an investor who does not reside in the US but has invested in US shares, you will be prompted to complete the declaration and to fill in all required information.
These are the following blocks you should tick and shouldn’t
Is the account holder an individual or a non-individual/entity
Yes (Yes means that you are confirming to be an individual)
Is the account holder a citizen or resident in the United States?
No ( No means that you currently do not reside in the U.S.)
Is the address provide a P.O. ‘Box or in-care-of’ address?
No - make sure you choose NO unless you have the required information
If you do not have a US TIN, then do not fill in anything. Click the box within the section
This is the country where you pay tax. After if you do not have a tax number leave the TIN option blank and click the box within the section
Is the account holder claiming a reduced rate of withholding under the tax treaty between the U.S and another country?
YES - This means that you are confirming that you are a South African tax citizen and not a U.S. citizen to pay lower tax on dividends received
NO - If you are a tax resident of another country, you can see whether or not your country is on the "country list" in the drop-down. If your country is not on the list, you need to select NO i.e your country does not have a Treaty Benefit
This will be the country in which you pay tax, make sure to click the box below to certify that you live within the country.
Do not click the special rate claim box unless you have the required information.
From there on, you can read and click the following blocks to complete your form.
The tax rate you pay is determined by the country you are a resident in, take for example:
South African citizen
South African tax residents are only liable for a 15% DWT on dividends received from the USA. This tax rate differs from one country to another and depends on the Double Tax Treaty your country has signed with the IRS.
NOTE: In filling in the "Treaty benefits" section of the form, unless you have received special approval from the IRS for a "Special rate claim", please leave the box unticked which states "The account holder is making a special rate claim under a specific article and paragraph of the tax treaty" This box will only be ticked in rare circumstances where you have obtained special approval from the IRS to pay withholding tax at a custom rate, and will not be applicable to 99% of customers.