Double Taxation Agreement Between South Africa And Germany

International tax law includes all legal provisions that include foreign-related tax matters. These include internal tax laws in Germany, such as the Income Tax Act and the Tax Law, as well as double taxation agreements that Germany has entered into with other countries. Germany generally provides the method of exemption with progression in order to avoid double taxation. However, dividends are tax-exempt only to the extent that they are distributed by a South African company with at least 10% of the capital held by a German company and whose dividends are not deductible in South Africa. However, the credit method applies to a number of specific incomes (for example. B (i) tax-free dividends; (ii) capital gains from shares of South African companies whose assets are primarily real estate; (iii) directors` fees; (iv) the incomes of artists and athletes; and (v) business revenues when the requirements of an activity clause are not met). South Africa provides the credit method to avoid double taxation. Yanga Mputa, director of the tax unit of the national finance ministry, explained the process of ratifying tax agreements with Germany and Mexico, as well as the reasons for the treaties. Ms.

Mputa stressed that before coming into force, a tax treaty had to be ratified by Parliament, in accordance with Article 231 of the Constitution and Article 108, paragraph 2, of the Income Tax Act. The treaties that had to be ratified with Mexico and Germany were in South Africa`s best interest. Germany Tax Treaty Ms Mputa outlined the reasons for the need to ratify this treaty. It was a renegotiation of an old treaty, originally signed in 1975, and at that time South Africa was still on a source-based tax system and had no capital gains tax. The revised treaty would include aspects of the old treaty and render it ineffective. The investment flows discussed showed that Germany has invested much more in South Africa than South Africa in Germany since 2005. Germany invested 75.2 billion euros in 2005. A., South Africa R19.3 billion R19.3 billion R.

in 2006, R82.2 billion compared to R22.6 billion R22.6 billion and R98.2 billion in 2007 Among the German companies present in South Africa were BMW, Puma, Siemens and Volkswagen, while the South African companies present in Germany were Dimension Data, Sasol and Sappi. Trade flows between South Africa and Germany showed that South Africa imported almost twice as much from Germany as exports.