Double Taxation Agreements

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Double TaxationAgreements

• 28 June 2004

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Process
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Process
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Process (Cont.)
Operation
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South Africa SwazilandDouble Taxation
Agreement
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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

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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

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Article 8 International Transport

• Normally restricted to air and sea transport
• Extended to rail and road transport in view of
  Swazilands land locked situation

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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

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Articles 11 Interest

• Withholding tax of 10 proposed by OECD Model
• In practice, withholding taxes vary widely
  internationally
• South Africa Swaziland DTA 10

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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

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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

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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

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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 Africas
  branch profits tax is included in Article 23(5)

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Questions?