RSA/Kuwait and RSA/Ukraine Double Taxation Agreements

Meeting report

FINANCE SELECT COMMITTEE
04 August 2004
RSA/Kuwait and RSA Ukraine DOUBLE TAXATION AGREEMENTS

Chairperson: Mr T Ralane

Documents handed out
Double Taxation Conventions/ Agreements
Explanatory memorandum on the Double Taxation Convention between the RSA and the Cabinet Ministers of Ukraine (e-mail - [email protected])
Explanatory memorandum on the Double Taxation Convention between the RSA and the State of Kuwait (e-mail - [email protected])

SUMMARY
The Committee recommended the adoption of the both Double Taxation Agreements. A number of articles have timeframes or percentages attached to them that are usually the subject of negotiation.

MINUTES

Mr A Masters (SARS- Manager: Legislative Research) presented on the Double Taxation Agreement (DTA). See presentation document.

The agreements closely follow the OECD model convention, which forms the foundation for the vast majority of Double Taxation Agreements. A number of articles have timeframes or percentages attached to them that are usually subject to negotiation. The presenter went on to highlight some of the important articles of the agreement.

Articles 5: Permanent establishment

This article determines the basis for being able to tax a company. Tax is levied only on permanent establishments.

Article 8: International Transport

Internationally this article normally relates to air and sea transport. In both agreements this article extends to profits derived from the rental on a "bare boat" basis of ships or aircraft used in international traffic, if such profits are incidental.

Article 20 of the RSA/Kuwait DTA provides that teachers and researchers who give lectures or carry out research at the invitation of the government, University, college, school, museum, cultural institution or as a result of a cultural exchange for a period not exceeding two years would not be taxed in the host country provided that such remuneration is derived from outside the host country.

Discussion

Dr Rob Davies (ANC) for an indication of number of countries with which South Africa has DTAs. It is important look at such agreements so as to establish if there are any lacunas that need to be addressed. He also asked if the OECD model that South Africa relies on in formulating her agreements is adequate.

Mr Master replied that there are a number of countries that South Africa has DTAs with but could not provide the exact numbers. Currently 43 agreements are in operation and there are a number that are in the process of being negotiated or ratified.

With regard to the OECD model he said that South Africa has taken those aspects that are suited to the local conditions and combined them with aspects of the UN model that suit developing economies. There have not been real problems with the model. Most countries have aspects of both models.

Mrs R Joemat (ANC) asked if South Africa is forfeiting any tax or revenue because of the various DTAs.

The meeting was adjourned.