A comparative study of double tax agreements in a Southern African context

Abstract

This study analyses Double Tax Agreements concluded by South Africa with the Southern African Development Community countries to identify in what respects these agreements do not follow the Organisation for Economic Co-operation and Development s Model Tax Convention on Income and on Capital. The study illustrates, in the format of a scenario analysis, the possible financial effects that the identified differences may theoretically have on the net income (after income tax) of corporate taxpayers in South Africa, if South Africa is the resident state. This explorative study used a survey as its research strategy. It employed a standard questionnaire to collect data for the tax years 2012 and 2013 from four participants, all being companies listed on the JSE, to test the scenario analysis that underpins this study. The research indicates that there are financial effects for South African corporate taxpayers, as resident state taxpayers, if the expenditure ratio to gross amount received exceeds certain ratios where the source state withholds withholding tax and where double taxation is eliminated according to the ordinary credit method.