Double taxation: National Treasury & South African Revenue Service on Protocol between South Africa & United Kingdom & on Agreement between South Africa & Kenya: briefing; Adoption of Hospital Revitalization Grant Report
Meeting Summary
The Committee was briefed by National Treasury and the South African Revenue Service on the Conventions, Agreements and Protocols on double taxation between South Africa and the United Kingdom and between South Africa and Kenya. Both the
Amendments, particularly with relation to the exchange of information between tax authorities, and the avoidance of double taxation had been addressed in the Protocols and Agreements. These Protocols and Agreements had generally followed international practice, particularly the Organisation for Economic Cooperation and Development (OECD) Model.
The Protocol between
The Report on the Hospital Revitalisation Grant was adopted by the Committee.
Meeting report
Double Taxation Briefing: National Treasury
Mr Lutando Mvovo, Deputy Director of Tax Policy: International Tax, National Treasury, briefed the Committee on the procedure for formal ratification of tax treaties. Before a tax treaty could come into force, it had to be ratified by Parliament. Such ratification itself could only take place after such a treaty was signed according to the Constitution and Section 108 (2) of the Income Tax Act. Contracting states would then notify one another on the completion of the procedures required by that State’s law to bring the tax treaties into force. Tax treaties would enter into force on the date of the receipt of the aforementioned notifications.
Mr Mvovo explained that the
Mr Mvovo briefed the Committee on the investment flows between
Mr Mvovo updated the Committee on the
Mr Mvovo briefed the Committee on the investment flows between
South African Revenue Service Briefing: Double Taxation
Mr Ron van der Merwe, Senior Manager: International Treaties, Legal and Policy Division, South African Revenue Service (SARS), briefed the Committee on SARS’ position relating to the treaties between
Mr Van der Merwe highlighted the Article dealing with dividends rate as well as the Article dealing with the exchange of information in the
Mr Van der Merwe then briefed the Committee on the Double Taxation Agreement between
Mr van der Merwe highlighted Articles dealing with permanent establishments specifically with relation to construction. He also highlighted Article 14 which dealt with independent personal services, for example, professional service providers such as lawyers or doctors who established a physical presence of 183 days in any twelve month period for taxation purposes.
Mr van der Merwe stated that taxation of shipping had been allowed, but had been reduced by 50%.
Mr van der Merwe also highlighted Article 20 which attempted to encourage movement between states of teachers, professors and researchers and exempted taxation in the host State for a period of two years.
Article 27 allowed the states to collect taxes on behalf of one another.
Mr Van der Merwe expressed hope that SARS would be signing or finalising exchange of information agreements with a number of jurisdictions, including
(See South African Revenue Service. Double Taxation Conventions / Agreements formal ratification).
Discussion:
Mr M Makhubela (COPE,
Mr Van der Merwe replied that this article was a compromise, because
Mr Makhubela further asked whether the provision allowing the exemption of taxation to teachers, professors and researchers would not allow tax evasion schemes to be carried out by some of these beneficiaries.
Mr Van der Merwe clarified that the payment of that salary was still taxed in the source State, but not in the host state for a period of two years.
Co-Chairperson Chaane asked whether or not all of the countries with which
Mr Van der Merwe replied that, to the best of his knowledge, the majority of treaties had been ratified in the other countries concerned.
Mr Mvovo noted that
Mr Van der Merwe stated that, if necessary, the Committee would be provided with a comprehensive list to confirm which states had ratified treaties with
Co-Chairperson De Beer noted a visit undertaken to Kenya and stated that there were a great many things that South Africa could learn from Kenya, particularly in agriculture where 78% of the country’s labour force were employed in that sector.
The Protocol between
Report of the Select Committee: Hospital Revitalisation Grant
The Appropriations Select Committee Chairperson, Mr Chaane, asked for questions and comments on the Report. Minor issues regarding the date and typographical references to the provinces were noted.
The Report was adopted by the Committee.
The meeting was adjourned.
Documents
- Protocol between Government of RSA & Government of the UK of Great Britain & Northern Ireland to amend the Convention for Avoida
- Explanatory memorandum on Double Taxation Agreement between the Republic of South Africa and Republic of Kenya
- Explanatory memorandum on Protocol Amending the Double Taxation Convention between Government of RSA & Government of UK of Great
- Agreement between Government of RSA & Government of Republic of Kenya for Avoidance of Double Taxation
- Double Taxation Briefing: National Treasury
- South African Revenue Service Briefing: Double Taxation
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