1. Double Taxation Agreements
28 June 2004

2. Process

3. Process Potential Treaties Prioritisation Public Notice Negotiation
Initialled
State Law Advisors

4. Process (Cont.) Informal Briefing Executive Authority Signature
Ratification
Operation

5. South Africa – Swaziland Double Taxation Agreement

6. 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…

7. 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

8. Article 8: International Transport
Normally restricted to air and sea transport
Extended to rail and road transport in view of Swaziland’s land locked situation

9. 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%

10. Articles 11: Interest Withholding tax of 10% proposed by OECD Model
In practice, withholding taxes vary widely internationally
South Africa – Swaziland DTA: 10%

11. 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%

12. 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

13. 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

14. 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 Africa’s branch profits tax is included in Article 23(5)

15. Questions?