Preliminary Hearings: Tax Treaties with Mexico, United Arab Emirates

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Preliminary Hearings Tax Treaties with Mexico,
United Arab Emirates

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

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Purpose of Tax Treaties

• Policy
• Promote economic growth by providing certainty to
  cross border investments
• Prevent double taxation of the same income
  through
• Certainty of tax treatment
• Assignment of taxing rights between the two
  treaty countries
• Administration
• Exchange of information
• Mutual Agreement Procedure

3
Reasons for the SA/Mexico Treaty

• Economic benefit
• Increase and strengthen economic relations with
  the Latin American region
• Interest by Mexico to have a tax treaty with
  South Africa

4
SA/Mexico Tax Treaty- Investment Flows

• Investment by Mexico
• Total investments by Mexico into South Africa
  were R35 million in 2004, R103 million in 2005
  and R202 million in 2006
• Investment by South Africa
• Total investments by South Africa into Mexico
  were R239 million in 2004, R243 million in 2005
  and R220 million in 2006
• Amongst African countries, South Africa is the
  fifth investor in Mexico
• Some of the South African companies or
  representative offices operating in Mexico are
  Alexander Forbes, Dimension Data, Gencor, Anglo
  American, Standard Bank, Sasol.

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SA/Mexico Tax Treaty-Trade Flows

• Exports to Mexico
• Exports to Mexico were R824, 7 million in 2004,
  R927 million in 2005, R1,48 billion in 2006 and
  R1,28 billion in 2007
• Main exports base metals chemical products,
• Imports from Mexico
• Imports from Mexico were R708 million in 2004,
  R1,1 billion in 2005, R1,9 billion in 2006 and
  R2,1 billion in 2007
• Main imports machinery, mechanical appliances,
  electrical

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Reasons for the SA/UAE Tax Treaty

• Economic benefit
• Strengthening of relations with the countries in
  the Middle East

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Economic Developments

• UAE has consistently been among the top five of
  the SA trading partners in the Middle East
• Approximately more than 30 S A companies or
  satellite offices are operating in UAE. SA
  companies such as LTA and Murray Roberts have
  been involved in major construction projects in
  the UAE, for example, expansion of Dubai
  International Airport , building of Arab Tower
  Hotel
• Other SA companies or satellite offices operating
  in UAE include the following Sasol Middle East,
  Woolworths, Young Designer Emporium, Dimension
  Data, Multi Choice Middle East
• SAA enhanced its code sharing agreement with
  Emirates that will increase travel between the
  two countries Daily flights between Cape Town
  Dubai and 3 flights a day between Johannesburg
  Dubai
• UAE hosts the largest community of SA expatriates
  in the Middle East
• Dubai World, investment group that represents the
  Government of Dubai, has assisted in developing
  SA tourism with the acquisition of majority
  stakes in three SA game reserves, Shamwari,
  Sanbona, Jock Safari Lodge game reserves and in
  V A Waterfront

8
SA/UAE Tax Treaty- Investment Flows

• Investment by UAE
• Total investments by UAE into South Africa were
  R262 million in 2004, R197 million in 2005 and
  R683 million in 2006
• Investment by South Africa
• Total investments by South Africa into UAE were
  R81million in 2004, R76 million in 2005 and R2,8
  billion in 2006

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SA/UAE Tax Treaty-Trade Flows

• Exports to UAE
• Exports to UAE were R2,4 billion in 2004, R2,9
  billion in 2005, R3,9 billion in 2006 and R5,6
  billion in 2007
• Main exports chemical products, machinery
  mechanical appliances, base metals
• Imports from UAE
• Imports from UAE were R702 million in 2004, R2,6
  billion in 2005, R3,9 billion in 2006 and R4,8
  billion in 2007
• Main imports mineral products, chemical
  products, articles of stone, plaster, cement,
  asbestos

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• THANK YOU