Double Taxation Agreements by cib77175

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									Double Taxation
 Agreements

              28 June 2004
Process
  Process
Potential Treaties

   Prioritisation

  Public Notice

   Negotiation

     Initialled

State Law Advisors
Process (Cont.)
   Informal Briefing

  Executive Authority

      Signature

   Formal Briefing

     Ratification

      Operation
 South Africa – Swaziland
Double Taxation Agreement
                Introduction
Follows the OECD Model Convention, which
 forms the foundation for the vast majority of
 Double Taxation Agreements (DTAs) worldwide

A number of articles have timeframes or
 percentages attached to them that are usually
 the subject of negotiation. These articles and
 other articles of interest in the South Africa –
 Swaziland DTA are as follows…
Article 5: Permanent Establishment
Construction
   12 months in OECD Model
   6 months in UN Model
   6 months in South Africa – Swaziland DTA

Services & Professional Services
   183 days in UN Model
   90 days in South Africa – Swaziland DTA
   Previously immediate
Article 8: International Transport
Normally restricted to air and sea transport

Extended to rail and road transport in view of
 Swaziland’s land locked situation
         Article 10: Dividends
Withholding tax of 5% or 15% proposed by
 OECD Model

In practice, withholding taxes vary widely
 internationally

South Africa – Swaziland DTA
   Shareholding of 25% and more: 10%
   Other shareholding: 15%
          Articles 11: Interest
Withholding tax of 10% proposed by OECD
 Model

In practice, withholding taxes vary widely
 internationally

South Africa – Swaziland DTA: 10%
           Articles 12 and 13
No withholding tax proposed by OECD Model

In practice, withholding taxes vary widely
 internationally

South Africa – Swaziland DTA
   Article 12: Royalties: 10%
   Article 13: Technical Fees: 10%
   Article 22: Double Taxation
Both South Africa and Swaziland use the credit
 system for eliminating double taxation

Tax sparing is permitted provided that both
 countries’ competent authorities agree to its
 application, which ensures that the concession is
 not abused

This treatment is consistent with that adopted
 with respect to SADC countries
Article 27: Assistance in Recovery
 Recent addition to OECD Model (2003)

 Underpinned by section 93 of the Income Tax
  Act, 1962, which sets out the procedure for
  recovery of taxes on behalf of another tax
  authority
                  Protocol
Confirms that a Swazi branch profits tax of up to
 10% of repatriated income does not infringe on
 Article 23(2) on non-discrimination with respect
 to permanent establishments

A similar provision dealing with South Africa’s
 branch profits tax is included in Article 23(5)
Questions?

								
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