Ratification: Tax Treaties with Sudan, Australia

1
Ratification Tax Treaties with Sudan, Australia

• Select Committee on Finance
• 24 June 2008
• Presented by Yanga Mputa
• Tax Policy Unit National Treasury

2
Tax Treaty Ratification Process

• Before a tax treaty can come into force, it has
  to be ratified by Parliament
• Ratification can only take place after the
  signing of the tax treaty
• In SA, ratification process is done in accordance
  with S231 of the Constitution read with S108(2)
  of the Income Tax Act
• The tax treaties presented today for ratification
  constitute what we believe to be the best
  interest of SA

3
Reasons for SA/Sudan Tax Treaty

• Economic relations
• SA foreign policy into Africa
• New tax treaty between South Africa and Sudan was
  signed on 7 November 2007

4
SA/Sudan Tax Treaty Trade Flows

• Exports to Sudan
• Exports to Sudan were R302 million in 2004, R434
  million in 2005, R463 million in 2006 and R718
  million in 2007
• Main exports machinery, mechanical appliances,
  plastics, rubber, vehicles
• Imports from Sudan
• Imports from Sudan were R5,6 million in 2004,
  R632 thousand in 2005, R2,5 million in 2006 and
  R6,9 million in 2007
• Main imports mineral products, machinery,
  mechanical appliances

5
SA/Sudan Tax Treaty Investment Flows

• Level of investment flows between the two
  countries still minimal
• SA Companies Operating in Sudan
• PetroSA
• Transnet
• Global Railway Engineering Consortium of South
  Africa
• MTN-Sudan

6
Reasons for SA/Australia Tax Treaty

• Protocol to the existing treaty. Tax treaty
  between South Africa and Australia came into
  force on 21 December 1999
• Proposed changes to the current tax treaty are
  necessary as a result of key changes to South
  African domestic tax legislation Conversion of
  Secondary Tax on Companies (STC) to a dividend
  tax at shareholder level
• Implementation of the proposed STC conversion is
  subject to renegotiation of nine tax treaties
  that have a zero rate withholding tax on
  dividends
• Tax treaty with Australia presented in Parliament
  today represents one of those treaties
• The revised tax treaty also addresses certain
  aspects that are not present in the old treaty

7
SA/Australia Tax Treaty Investment Flows

• Investments by Australia
• Total investments by Australia into South Africa
  increased from R946 million in 2003 to to R2
  billion in 2005
• Australian investments in South Africa increased
  significantly over the past decade mainly in the
  mining and agricultural sectors
• Major Australian investors in South Africa
  include mining company BHP Billiton and mining
  consultancy company RSG Global
• Investments by South Africa
• Total investments by South Africa into Australia
  amounted to R8,5 billion in 2003 and R8,6 billion
  in 2005
• Major South African investors in Australia
  include Wesbank, Pick n Pay, Woolworths, First
  Rand, RMB, Kumba Resources, Tiger Brands, Sappi,
  Murray Roberts

8
SA/Australia Tax Treaty Trade Flows

• Exports to Australia
• Exports to Australia were R7,15 billion in 2004,
  R9,7 billion in 2005 and R9 billion in 2006
• Australia is one of SA largest trading partners
• The majority of goods exported to Australia are
  finished goods and these include high quality
  motor cars, e.g. BMW , Mercedes Benz and
  Volkswagen
• Imports from Australia
• Imports from Australia were R7,2 billion in
  2004, R7,3 billion in 2005 and R9,5 billion in
  2006
• The majority of goods imported from Australia are
  primary products such as aluminium and finished
  goods such as pharmaceuticals

9
Thank You