South Africa identifies taxes qualifying for tax treaty relief

by Davide Anghileri

On 3 February, the South African Revenue Service (SARS) published Binding General Ruling (Income Tax) 9 (Issue 3), concerning taxes on income and substantially similar taxes for purposes of South Africa’s tax treaties. This ruling will be applicable for an indefinite period with effect from the date of publication, SARS says.

The aim of the ruling is to identify taxes that qualify for treaty relief because they are considered income taxes or similar taxes.

The first category identified in the ruling is comprised of typical taxes on taxable income, including taxes on capital gains, tax on foreign entertainers and sportspersons, turnover tax on micro businesses, withholding tax on royalties, withholding tax on interest, secondary tax on companies on dividends declared before 1 April 2012, and dividends tax on dividends declared and paid on or after 1 April 2012.

For purposes of the above list, amounts withheld from payments to non-resident sellers of immovable property in South Africa, employees’ tax, and provisional tax are not taxes on income, but represent advance payments of tax.

On the other hand, the customs and excise duty, diamond export levy, donations tax, estate duty, international oil pollution compensation fund contributions levy, royalty levied on the transfer of a mineral resource extracted from within South Africa, securities transfer tax skills development levy, transfer duty, unemployment insurance contributions, and value added tax are examples not to be considered taxes on income or similar taxes, and they thus do not qualify for treaty relief, the ruling says, specifying that this list is not exhaustive.

Davide Anghileri

Davide Anghileri is a PhD candidate at the University of Lausanne, where he is writing his thesis on the attribution of profits to PEs. He researches transfer pricing issues and lectures for the Master of Advanced Studies in International Taxation and Executive Program on Transfer Pricing.

Anghileri, a Contributing Editor at MNE Tax, previously worked as a policy advisor to the Swiss government on BEPS issues. He can be reached at

Davide Anghileri

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