Double Tax Agreement between South Africa and Namibia
Double tax agreements are agreements between two countries aimed at avoiding double taxation of individuals and entities who earn income in both countries. These agreements seek to ensure fairness and eliminate tax evasion while promoting trade and investment between countries. In this article, we explore the double tax agreement between South Africa and Namibia.
The South Africa-Namibia double tax agreement was signed on 12 April 2015 and entered into force on 1 January 2017. The agreement applies to taxes on income and capital gains imposed by both countries. It covers individuals and entities that are residents of either South Africa or Namibia.
The agreement aims to provide clarity and certainty regarding the taxation of cross-border income and capital gains. It does this by allocating taxing rights to each country and providing for the elimination of double taxation in situations where both countries have the right to tax the same income.
In terms of the agreement, the main taxing rights are allocated as follows:
– Income from employment: Tax is generally payable in the country where the employment is exercised. However, if the employment is exercised in one country but the employer is resident in the other country, the tax may be payable in the country where the employer is resident.
– Business profits: Tax is generally payable in the country where the business is carried on. However, if the business is carried on in both countries, the tax may be payable in the country where the profits arise or where the business has a permanent establishment.
– Dividends: Tax is generally payable in the country where the dividends are received, but a reduced rate of tax may be applicable if the recipient is a company that owns at least 10% of the voting power in the company paying the dividends.
– Interest: Tax is generally payable in the country where the interest arises, but a reduced rate of tax may be applicable if the recipient is a resident of the other country
– Royalties: Tax is generally payable in the country where the royalties arise, but a reduced rate of tax may be applicable if the recipient is a resident of the other country.
The agreement also provides for the exchange of information between the tax authorities of South Africa and Namibia to prevent tax evasion and ensure compliance with the agreement. This exchange of information is subject to strict confidentiality requirements.
In summary, the South Africa-Namibia double tax agreement is an important tool for promoting cross-border trade and investment while avoiding double taxation and ensuring fairness. The agreement provides clarity and certainty regarding the taxation of cross-border income and capital gains and promotes cooperation between the tax authorities of both countries.
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