AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
An SA company can claim a section 6quat(1) rebate in its ITR14 for Nigerian tax on foreign-source income that was proved to be payable, limited to the treaty rate and to the SA tax on that income. Where the income is South African-source, such as fees for work done in South Africa, the rebate is not available and section 6quat(1C) may allow a deduction instead. The old section 6quin rebate was deleted for years starting on or after 1 January 2016. Keep the Nigerian WHT receipts as proof.
Nigerian clients routinely withhold tax from payments to South African companies. That tax is not lost, but recovering it in South Africa depends on getting four things right: the source of the income, the treaty rate, the limit on the rebate, and the paperwork. SARS sets out its view in Interpretation Note 18 (Issue 5, dated 9 December 2022), which this guide follows.
Step 1: Is the income foreign-source or South African-source?
This decides which relief applies.
- Foreign-source amount
- Section 6quat(1) rebate: Nigerian tax is credited against SA normal tax, within limits.
- South African-source amount
- No section 6quat(1) rebate. Section 6quat(1C)(a) may allow the foreign tax as a deduction in working out income from carrying on a trade.
IN18's Example 1(B) treats foreign tax on managerial fees for services rendered in South Africa as deductible under section 6quat(1C)(a), not creditable. For many SA companies the fees Nigerian clients pay are for work done in South Africa, so this is often the relevant route. A deduction is worth less than a rebate: it reduces taxable income rather than tax. IN18's Example 15 notes the deduction needs a trade, so it did not cover foreign tax on interest in that example.
What about section 6quin?
Section 6quin used to give a rebate for foreign tax on SA-source service income. IN18 records that it was deleted with effect from years of assessment commencing on or after 1 January 2016. SARS's FTW01 form still appears on its website under section 6quin, but it relates to the old rebate; do not rely on it for current years.
Step 2: Only tax levied in line with the treaty counts
IN18 says the foreign tax must be legitimately levied under the foreign law and any applicable treaty, and is "limited to the tax which may be levied under the applicable tax treaty" (para 5.3.2). Its Example 15 shows the effect: with a 10% treaty rate and 25% withheld, only 10% qualifies for the rebate, and the other 15% cannot be claimed as a rebate or a deduction. The excess must be recovered from the foreign tax authority.
The SA–Nigeria treaty caps interest and royalties at 7.5%, and dividends at 7.5% or 10%. If a Nigerian payer deducted 10% on royalties without applying the treaty, only 7.5% can count in South Africa. For service fees with no Nigerian permanent establishment, Article 7 of the treaty says the profits are taxable only in South Africa, which raises the question whether any Nigerian tax on them was levied in line with the treaty. Take advice before claiming, and consider asking Nigeria for a refund. See Nigerian withholding tax on payments to an SA company.
Step 3: The rebate is capped
Under section 6quat(1B)(a), the rebate cannot exceed the SA normal tax attributable to the foreign taxable income, worked out using the ratio of foreign taxable income to total taxable income (IN18 para 5.5). IN18 para 5.8 deals with carrying any excess forward to the following year; read it for the conditions. Article 22(b) of the treaty uses the same kind of ratio limit for Nigerian tax deducted from SA tax.
A labelled example
Example only. The rate is illustrative, not today's. An SA company receives a royalty of ₦4,000,000 from a Nigerian licensee, which withholds 10% (₦400,000) instead of the treaty's 7.5% (₦300,000). Assume the royalty is foreign-source and translates to R50,000, and the ₦300,000 to R3,750 at the same illustrative rate of ₦80 per rand.
- Tax that can qualify for the rebate: at most the treaty amount, R3,750.
- The extra ₦100,000 (R1,250 at that rate) does not qualify; seek a refund in Nigeria.
- The rebate is also capped at SA tax on the R50,000 of foreign taxable income under the section 6quat(1B)(a) formula.
IN18 section 7.1 deals with translating foreign tax into rand under section 6quat(4); follow it rather than this illustrative rate.
Step 4: Proof
IN18 section 9 sets out the documents SARS expects, including additional information where tax was withheld at source. The core document is the Nigerian payer's WHT receipt, which under Nigeria's 2024 regulations shows your name, address and TIN, the nature of the transaction, the gross amount, the tax deducted and the month. Also keep the invoice, the contract (to show the source and the nature of the income) and the bank record of the net payment.
Step 5: Timing
The claim goes in the ITR14, which SARS says must be filed within 12 months of the company's financial year-end. Section 6quat(5) allows SARS to issue additional or reduced assessments within six years of the original assessment to give effect to the correct rebate (IN18 para 5.10). Chase missing Nigerian receipts during the year, not at filing time; see year-end for an SA company with Nigerian operations.
Where Pryme fits
The Finance agent in a Pryme Business Account can list Nigerian clients that deducted tax but have not sent receipts, for a person to follow up, and verifiable statements through Pryme's partnership with VerifyDoc.ai can support your payment records (verifiable receipts). Outside Nigeria, Pryme's activities are carried out through regulated partners.
Questions people ask
Can my SA company claim Nigerian WHT in its ITR14?
Yes, as a section 6quat(1) rebate where the income is foreign-source and the tax was levied in line with the treaty; for SA-source income, section 6quat(1C) may allow a deduction instead.
Can I still use section 6quin?
No. IN18 records that it was deleted for years of assessment starting on or after 1 January 2016.
What if Nigeria withheld more than the treaty rate?
Only the treaty amount can count in South Africa; recover the excess from the Nigerian tax authority.
What proof does SARS need for Nigerian WHT?
IN18 section 9 sets out the information; the core document is the Nigerian payer's WHT receipt, with the invoice, contract and bank record.
Sources
- SARS, Interpretation Note 18 (Issue 5, 9 December 2022): Rebate and deduction for foreign taxes on income · accessed Oct 2026
- SARS, Agreement between South Africa and Nigeria for the avoidance of double taxation (signed 29 April 2000, in force 5 July 2008) · accessed Oct 2026
- SARS, Companies can file their ITR14 tax returns (16 July 2021) · accessed Oct 2026
- Mondaq, An overview of the Nigerian withholding tax regulations of 2024 · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.