1

This Order may be cited as the Double Taxation Relief (Taxes on Income) (South Africa) Order 2002.

NOTES
Initial Commencement
Date Made

Date made: 17 December 2002: (no specific commencement provision).

Double Taxation Relief95 Tax Law92 International Tax92

2

2

It is hereby declared—

(a)    that the arrangements specified in the Convention set out in Part I of the Schedule to this Order and in the Exchange of Notes constituting an Agreement set out in Part II of that Schedule have been made with the Government of the Republic of South Africa with a view to affording relief from double taxation in relation to income tax, corporation tax or capital gains tax and taxes of a similar character imposed by the laws of the Republic of South Africa;

(b)    that those arrangements include provisions with respect to the exchange of information necessary for carrying out the domestic laws of the United Kingdom and the laws of the Republic of South Africa concerning taxes covered by the arrangements including, in particular, provisions about the prevention of fiscal evasion with respect to those taxes; and

(c)    that it is expedient that those arrangements should have effect.

NOTES
Initial Commencement
Date Made

Date made: 17 December 2002: (no specific commencement provision).

Capital Gains Tax96 Company Law & Business Entities91 Overseas Elements of Income Tax99 Companies & Corporate Bodies91 Income Tax99 Overseas Elements of Capital Gains Tax96 Double Taxation Relief95 Tax Law96 International Tax96

Signature

A K Galloway

Clerk of the Privy Council

Double Taxation Relief94 Tax Law94 International Tax94

EXPLANATORY NOTE

EXPLANATORY NOTE (This note is not part of the Order)

The Convention with South Africa (which replaces the Convention set out in the Schedule to the Double Taxation Relief (Taxes on Income) (South Africa) Order 1969 No 864) is set out in Part I of the Schedule to this Order.

The Convention provides for business profits not arising through a permanent establishment to be taxed only in the country of the taxpayer's residence. Profits attributable to a permanent establishment may be taxed in the country in which the permanent establishment is situated (Articles 5 and 7).

Income from immovable property and gains derived from the alienation of such property may be taxed in the country in which the property is situated (Articles 6 and 13).

International shipping and air transport profits are generally to be taxed only in the country of residence of the operator (Article 8).

The Convention includes rules for determining taxable profits when a company in one country is related to a company in the other (Article 9).

Dividends paid by a company that is a resident of one country are taxable only in the other country if the beneficial owner is a company that is a resident of the other country and controls, directly or indirectly, at least 10 per cent of the voting power in the company paying the dividends. In all other cases dividends may also be taxed in the country in which they arise according to the laws of that country, but if the beneficial owner is a resident of the other country the tax charged is not to exceed 15 per cent of the gross amount of the dividends (Article 10).

Interest arising in one country and paid to a resident of the other country is taxable only in the other country, provided that resident is the beneficial owner of the interest (Article 11).

Royalties arising in one country and paid to a resident of the other country are taxable only in the other country, provided that resident is the beneficial owner of the royalties (Article 12).

Capital gains arising from the disposal of movable property are normally to be taxed only in the country of the taxpayer's residence. Gains arising from the disposal of assets of a permanent establishment which the taxpayer has in the other country may be taxed in that other country (Article 13).

The earnings of temporary business visitors and some other individuals are, subject to certain conditions, to be taxed only in the country of the taxpayer's residence (Article 14).

Fees received by a resident of one country in his capacity as a director of a company resident in the other country may be taxed in the latter country (Article 15).

Income derived from the activities of entertainers and sportspersons may, with certain exemptions, be taxed in the country in which those activities are exercised (Article 16).

Occupational pensions (other than those paid in respect of Government service) and annuities are to be taxed only in the country of residence of the recipient (Article 17).

Subject to certain conditions, tax relief is to be allowed in the visited country for contributions made by and in respect of expatriate employees to an occupational pension scheme in the other country (Article 17).

Government service remuneration and pensions are normally taxable only by the paying Government (Article 18).

Certain payments made to visiting students and apprentices for their maintenance, education and training are exempt from tax in the country visited (Article 19).

Other income not specified in the Convention will be taxed by the country of the taxpayer's residence, and may if derived from sources in the other country also be taxed there (Article 20).

Where income continues to be taxable in both countries, credit will be given by the country of the taxpayer's residence in respect of tax imposed by the other country (Article 21).

There are provisions safeguarding nationals and enterprises of one country against discriminatory taxation in the other country (Article 23). Provision is made for consultation and exchange of information between the taxation authorities of the two countries (Articles 24 and 25).

The Exchange of Notes set out in Part II of the Schedule clarifies the intended interpretation of particular aspects of the Convention.

The Convention will enter into force on the date of the later of the notifications by each country of the completion of its legislative procedures. The Convention is to take effect in the United Kingdom from 1st April in respect of corporation tax and from 6th April for income tax and capital gains tax in the calendar year next following that in which it enters into force. The date of entry into force will in due course be published in the London, Edinburgh and Belfast Gazettes.

Pensions Law93 Company Law & Business Entities92 Companies & Corporate Bodies92 Income Tax93 Overseas Elements of Capital Gains Tax97 Pensions Taxation93 Pensions Income93 International Tax97 Tax Law93 Capital Gains Tax97 Personal Taxes93 Overseas Elements of Income Tax99 Double Taxation Relief94