UK/South Africa Double Taxation Convention Signed 4 July 2002
UK/SOUTH AFRICA DOUBLE TAXATION CONVENTIONSIGNED 4 JULY 2002Entered into force 17 December 2002Effective in United Kingdom from 1 April 2003 for corporation tax and from 6April 2003 for income tax and capital gains taxEffective in South Africa from 1 January 2003The Convention was amended by a protocol signed on 8 November 2010 andwhich entered into force on 13 October 2011. The new “Dividends” article(Article 10) is effective from 1 April 2012.Double Taxation Agreements are reproduced under the terms of CrownCopyright Policy Guidance issued by HMSO.
Table of ContentsArticle 1 Persons Covered . 5Article 2 Taxes Covered . 5Article 3 General Definitions . 5Article 4 Residence . 7Article 5 Permanent Establishment . 8Article 6 Income from Immovable Property . 10Article 7 Business Profits . 10Article 8 Shipping and Air Transport . 11Article 9 Associated Enterprises . 12Article 10 Dividends . 12Article 11 Interest . 13Article 12 Royalties . 14Article 13 Capital Gains . 15Article 14 Income from Employment . 16Article 15 Directors' Fees . 17Article 16 Entertainers and Sportspersons . 17Article 17 Pensions and Annuities . 17Article 18 Government Service . 19Article 19 Students and Apprentices . 19Article 20 Other Income . 19Article 21 Elimination of Double Taxation . 20Article 22 Limitation of Relief . 21Article 23 Non-discrimination . 21Article 24 Mutual Agreement Procedure . 22Article 25 Exchange of Information . 23Article 25A Assistance in the Collection of Taxes . 24Article 26 Members of Diplomatic or Permanent Missions and Consular Posts . 25Article 27 Entry into Force . 26Article 28 Termination . 27
CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM OFGREAT BRITAIN AND NORTHERN IRELANDANDTHE GOVERNMENT OF THE REPUBLIC OF SOUTH AFRICAFOR THE AVOIDANCE OF DOUBLE TAXATION AND THEPREVENTION OF FISCAL EVASION WITH RESPECT TOTAXES ON INCOME AND ON CAPITAL GAINSPreambleThe Government of the United Kingdom of Great Britain and Northern Ireland and theGovernment of the Republic of South Africa desiring to promote and strengthen the economicrelations between the two countries by the conclusion of a new Convention for the avoidance ofdouble taxation and the prevention of fiscal evasion with respect to taxes on income and oncapital gains,Have agreed as follows:
Article 1Persons CoveredThis Convention shall apply to persons who are residents of one or both of theContracting States.Article 2Taxes Covered1.This Convention shall apply to taxes on income and on capital gains imposed onbehalf of a Contracting State or of its political subdivisions, irrespective of themanner in which they are levied.2.There shall be regarded as taxes on income and on capital gains all taxesimposed on total income, or on elements of income, including taxes on gainsfrom the alienation of movable or immovable property.3.The existing taxes to which this Convention shall apply are in particular:(a)in the case of South Africa:(i)(ii)(iii)the normal tax;the secondary tax on companies; andthe withholding tax on royalties;(hereinafter referred to as "South African tax");(b)in the case of the United Kingdom:(i)(ii)(iii)the income tax;the corporation tax; andthe capital gains tax;(hereinafter referred to as "United Kingdom tax").4.This Convention shall also apply to any identical or substantially similar taxesthat are imposed by either Contracting State after the date of signature of thisConvention in addition to, or in place of, the existing taxes. The competentauthorities of the Contracting States shall notify each other of any significantchanges that have been made in their respective taxation laws.Article 3General Definitions1.For the purposes of this Convention, unless the context otherwise requires:(a)the term "South Africa" means the Republic of South Africa and, when
used in a geographical sense, includes the territorial sea thereof as wellas any area outside the territorial sea, including the continental shelf,which has been or may hereafter be designated, under the laws of SouthAfrica and in accordance with international law, as an area within whichSouth Africa may exercise sovereign rights or jurisdiction;(b)the term "United Kingdom" means Great Britain and Northern Ireland,including any area outside the territorial sea of the United Kingdom whichin accordance with international law has been or may hereafter bedesignated, under the laws of the United Kingdom concerning theContinental Shelf, as an area within which the rights of the UnitedKingdom with respect to the sea bed and sub-soil and their naturalresources may be exercised;(c)the terms "a Contracting State" and "the other Contracting State" meanSouth Africa or the United Kingdom, as the context requires;(d)the term "business" includes the performance of professional servicesand of other activities of an independent character;(e)the term "company" means any body corporate or any entity that istreated as a body corporate for tax purposes;(f)the term "competent authority" means:(i)in the case of South Africa, the Commissioner for the SouthAfrican Revenue Service or an authorised representative; and(ii)in the case of the United Kingdom, the Commissioners of InlandRevenue or their authorised representative;(g)the term "enterprise" applies to the carrying on of any business;(h)the terms "enterprise of a Contracting State" and "enterprise of the otherContracting State" mean respectively an enterprise carried on by aresident of a Contracting State and an enterprise carried on by a residentof the other Contracting State;(i)the term "international traffic" means any transport by a ship or aircraftoperated by an enterprise of a Contracting State, except when the ship oraircraft is operated solely between places in the other Contracting State;(j)the term "national" means:(i)in relation to South Africa, any individual possessing South Africannationality and any legal person or association deriving its statusas such from the law in force in South Africa; and
(ii)(k)the term "person" includes an individual, a company and any other bodyof persons and does not include a partnership;(l)the term “property investment company” means:(m)2.in relation to the United Kingdom, any British citizen, or any Britishsubject not possessing the citizenship of any otherCommonwealth country or territory, provided such citizen orsubject has the right of abode in the United Kingdom; and anylegal person, partnership, association or other entity deriving itsstatus as such from the law in force in the United Kingdom;(i)in South Africa, a company that may be agreed between thecompetent authorities as corresponding to a real estateinvestment trust;(ii)in the United Kingdom, a real estate investment trust within themeaning of section 103 of Finance Act 2006;the term “qualifying dividend” means:(i)in South Africa, a dividend that may be agreed between thecompetent authorities as being paid out of tax-exempt propertyincome; and(ii)in the United Kingdom, a dividend from tax-exempt income withinsection 107(8) of Finance Act 2006.As regards the application of the provisions of this Convention at any time by aContracting State, any term not defined therein shall, unless the contextotherwise requires, have the meaning that it has at that time under the law ofthat State for the purposes of the taxes to which this Convention applies, anymeaning under the applicable tax laws of that State prevailing over a meaninggiven to the term under other laws of that State.Article 4Residence1.For the purposes of this Convention, the term "resident of a Contracting State"means any person who, under the laws of that State, is liable to tax therein byreason of that person’s domicile, residence, place of management, place ofincorporation or any other criterion of a similar nature, and also includes thatState and any political subdivision or local authority thereof.
2.3.Where by reason of the provisions of paragraph 1 of this Article an individual is aresident of both Contracting States, then that individual’s status shall bedetermined in accordance with the following rules:(a)the individual shall be deemed to be a resident solely of the ContractingState in which a permanent home is available to the individual; if apermanent home is available to the individual in both States, theindividual shall be deemed to be a resident solely of the State with whichthe individual’s personal and economic relations are closer (centre of vitalinterests);(b)if sole residence cannot be determined under the provisions of subparagraph (a), the individual shall be deemed to be a resident solely ofthe State in which the individual has an habitual abode;(c)if the individual has an habitual abode in both Contracting States or inneither of them, the individual shall be deemed to be a resident solely ofthe State of which the individual is a national;(d)if the individual is a national of both Contracting States or of neither ofthem, the competent authorities of the Contracting States shall settle thequestion by mutual agreement.Where by reason of the provisions of paragraph 1 of this Article a person otherthan an individual is a resident of both Contracting States, then it shall bedeemed to be a resident solely of the State in which its place of effectivemanagement is situated.Article 5Permanent Establishment1.For the purposes of this Convention, the term "permanent establishment" meansa fixed place of business through which the business of an enterprise is whollyor partly carried on.2.The term "permanent establishment" includes especially:(a)(b)(c)(d)(e)(f)(g)a place of management;a branch;an office;a factory;a workshop;a mine, an oil or gas well, a quarry or any other place of extraction ofnatural resources;an installation or structure for the exploration for natural resources.
3.4.5.The term "permanent establishment" likewise encompasses:(a)a building site, a construction, assembly or installation project or anysupervisory activity in connection with such site or project, but only wheresuch site, project or activity continues for a period of more than twelvemonths;(b)the performance of professional services or other activities of anindependent character by an individual, but only where those services oractivities continue within a Contracting State for a period or periodsexceeding in the aggregate 183 days in any twelve-month periodcommencing or ending in the fiscal year concerned.Notwithstanding the preceding provisions of this Article, the term "permanentestablishment" shall be deemed not to include:(a)the use of facilities solely for the purpose of storage, display or delivery ofgoods or merchandise belonging to the enterprise;(b)the maintenance of a stock of goods or merchandise belonging to theenterprise solely for the purpose of storage, display or delivery;(c)the maintenance of a stock of goods or merchandise belonging to theenterprise solely for the purpose of processing by another enterprise;(d)the maintenance of a fixed place of business solely for the purpose ofpurchasing goods or merchandise, or of collecting information, for theenterprise;(e)the maintenance of a fixed place of business solely for the purpose ofcarrying on, for the enterprise, any other activity of a preparatory orauxiliary character; and(f)the maintenance of a fixed place of business solely for any combinationof activities mentioned in sub-paragraphs (a) to (e) of this paragraph,provided that the overall activity of the fixed place of business resultingfrom this combination is of a preparatory or auxiliary character.Notwithstanding the provisions of paragraphs 1 and 2 of this Article, where aperson - other than an agent of an independent status to whom paragraph 6of this Article applies - is acting on behalf of an enterprise and has, andhabitually exercises, in a Contracting State an authority to conclude contractson behalf of the enterprise, that enterprise shall be deemed to have apermanent establishment in that State in respect of any activities which thatperson undertakes for the enterprise, unless the activities of such person arelimited to those mentioned in paragraph 4 of this Article which, if exercised
through a fixed place of business, would not make this fixed place of businessa permanent establishment under the provisions of that paragraph.6.An enterprise shall not be deemed to have a permanent establishment in aContracting State merely because it carries on business in that State through abroker, general commission agent or any other agent of an independent status,provided that such persons are acting in the ordinary course of their business.7.The fact that a company which is a resident of a Contracting State controls or iscontrolled by a company which is a resident of the other Contracting State, orwhich carries on business in that other State (whether through a permanentestablishment or otherwise), shall not of itself constitute either company apermanent establishment of the other.Article 6Income from Immovable Property1.Income derived by a resident of a Contracting State from immovable property(including income from agriculture or forestry) situated in the other ContractingState may be taxed in that other State.2.The term "immovable property" shall have the meaning which it has under thelaw of the Contracting State in which the property in question is situated. Theterm shall in any case include property accessory to immovable property,livestock and equipment used in agriculture and forestry, rights to which theprovisions of general law respecting landed property apply, usufruct ofimmovable property and rights to variable or fixed payments as consideration forthe working of, or the right to work, mineral deposits, sources and other naturalresources. Ships and aircraft shall not be regarded as immovable property.3.The provisions of paragraph 1 of this Article shall apply to income derived fromthe direct use, letting or use in any other form of immovable property.4.The provisions of paragraphs 1 and 3 of this Article shall also apply to theincome from immovable property of an enterprise.Article 7Business Profits1.The profits of an enterprise of a Contracting State shall be taxable only in thatState unless the enterprise carries on business in the other Contracting Statethrough a permanent establishment situated therein. If the enterprise carries onbusiness as aforesaid, the profits of the enterprise may be taxed in the otherState but only so much of them as is attributable to that permanentestablishment.
2.Subject to the provisions of paragraph 3 of this Article, where an enterprise of aContracting State carries on business in the other Contracting State through apermanent establishment situated therein, there shall in each Contracting Statebe attributed to that permanent establishment the profits which it might beexpected to make if it were a distinct and separate enterprise engaged in thesame or similar activities under the same or similar conditions and dealingwholly independently with the enterprise of which it is a permanentestablishment.3.In determining the profits of a permanent establishment, there shall be allowedas deductions expenses which are incurred for the purposes of the permanentestablishment, including executive and general administrative expenses soincurred, whether in the Contracting State in which the permanent establishmentis situated or elsewhere.4.No profits shall be attributed to a permanent establishment by reason of themere purchase by that permanent establishment of goods or merchandise forthe enterprise.5.For the purposes of the preceding paragraphs, the profits to be attributed to thepermanent establishment shall be determined by the same method year by yearunless there is good and sufficient reason to the contrary.6.Where profits include items of income or capital gains which are dealt withseparately in other Articles of this Convention, then the provisions of thoseArticles shall not be affected by the provisions of this Article.Article 8Shipping and Air Transport1.Profits of an enterprise of a Contracting State from the operation of ships oraircraft in international traffic shall be taxable only in that State.2.For the purposes of this Article, profits from the operation of ships or aircraft ininternational traffic include:(a)profits from the rental on a bareboat basis of ships or aircraft; and(b)profits from the use or rental of containers (including trailers
Government of the Republic of South Africa desiring to promote and strengthen the economic relations between the two countries by the conclusion of a new Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital gains, Have agreed as follows:
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