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Double Taxation Conventions / Agreements

Learn about the key articles and provisions in the Double Taxation Convention between South Africa and Ukraine, which closely follows the OECD Model Convention and covers permanent establishment, international transport, dividends, interest, royalties, and more.

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Double Taxation Conventions / Agreements

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  1. Double TaxationConventions / Agreements 4 August 2004

  2. South Africa – UkraineDouble Taxation Convention

  3. Introduction • Closely 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 – Ukraine Double Tax Convention are as follows…

  4. Article 5: Permanent Establishment • Construction • 12 months in OECD Model • 6 months in UN Model • 12 months in South Africa – Ukraine DT Convention • Services & Professional Services • 183 days in UN Model • More than 6 months in any 12 months in South Africa – Ukraine DT Convention

  5. Article 8: International Transport • Normally restricted to air and sea transport and is so in this Convention • Extended to include profits derived from the rental on a “bare boat” basis of ships or aircraft used in international traffic, if such profits are incidental. (Standard SA clause) • Extended to include profits from the use or rental of containers including trailers, barges and related equipment for the transport of containers.

  6. Article 10: Dividends • Withholding tax of 5% or 15% proposed by OECD Model • In practice, withholding taxes vary widely internationally • South Africa – Ukraine DT Convention • Shareholding of 20% (OECD - 25%) and more: 5% • Other shareholding: 15%

  7. Articles 11: Interest • Withholding tax of 10% proposed by OECD Model • In practice, withholding taxes vary widely internationally • South Africa – Ukraine DT Convention: 10% • The withholding will not apply, where interest is being paid by the Government of that Contracting State or is being paid to the Government of the other Contracting State or is in respect of loans made in application of an agreement concluded between the Governments of the Contracting States

  8. Article 12: Royalties • No withholding tax proposed by OECD Model • In practice, withholding taxes vary widely internationally • South Africa – Ukraine DT Convention • Article 12: Royalties: 10% (Clarification re PE, standard UN Model source rule clause)

  9. Article 21: Double Taxation • Both South Africa and Ukraine use the credit method for eliminating double taxation

  10. Article 25: Assistance in Collection Collection • 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

  11. Protocol • Confirms that a South African branch profits tax of 35% does not infringe on Article 22 on non-discrimination with respect to permanent establishments as non-resident companies are exempt from the imposition of Secondary Tax on Companies (STC).

  12. South Africa – KuwaitDouble Taxation Agreement

  13. Introduction • Closely 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 – Kuwait DTA are as follows…

  14. Article 5: Permanent Establishment • Construction • 12 months in OECD Model • 6 months in UN Model • 6 months in South Africa – Kuwait DTA • Services & Professional Services • 183 days in UN Model • More than 6 months in any 12 months in South Africa – Kuwait DTA (with specific reference to “substantial technical, mechanical or scientific equipment or machinery”) • Professional Services addressed in Article 14 (183 days)

  15. Article 8: International Transport • Normally restricted to air and sea transport and is so in this DTA • Extended to include profits derived from the rental on a “bare boat” basis of ships or aircraft used in international traffic, if such profits are incidental. (Standard SA clause) • Extended to include profits from the use or rental of containers including trailers, barges and related equipment for the transport of containers.

  16. Article 10: Dividends • Withholding tax of 5% or 15% proposed by OECD Model • In practice, withholding taxes vary widely internationally • South Africa – Kuwait DTA • No withholding

  17. Articles 11: Interest • Withholding tax of 10% proposed by OECD Model • In practice, withholding taxes vary widely internationally • South Africa – Kuwait DTA: No withholding

  18. Article 12: Royalties • No withholding tax proposed by OECD Model • In practice, withholding taxes vary widely internationally • South Africa – Kuwait DTA • Article 12: Royalties: 10% (Clarification re PE, standard UN Model source rule clause)

  19. Article 20: Teachers & Researchers • Where teaching, giving lectures or carrying out research • At invitation of Government, University, College, School, Museum, Cultural Institution or as a result of a Cultural Exchange • For a period not exceeding 2 years • Not taxed in host country provided such remuneration is derived from outside the host country

  20. Article 23: Double Taxation • Both South Africa and Kuwait use the credit method for eliminating double taxation

  21. Assistance in Collection • Recent addition to OECD Model (2003) • Not in this DTA, legal basis for such assistance needs to be present in both countries and such arrangements will never operate unilaterally.

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