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Tax Treaty between South Africa & Saudi Arabia: Policy Rationale

Understand the tax treaty between South Africa and Saudi Arabia, its economic benefits, investment flows, trade impacts, and cross-border movement factors. Presentation by Yanga Mputa from National Treasury in 2007.

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Tax Treaty between South Africa & Saudi Arabia: Policy Rationale

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  1. Tax Treaty between South Africa & Saudi Arabia: Policy Rationale Portfolio Committee on Finance 6 March 2007 Presented by Yanga Mputa Tax Policy Unit :National Treasury

  2. Purpose of Tax Treaties Policy • Promote economic growth by providing certainty to cross border investments • Prevent double taxation of the same income through: • Certainty of tax treatment • Assignment of taxing rights between the two treaty countries Administration • Exchange of information • Mutual Agreement Procedure

  3. Reasons for the Saudi Arabian Treaty (Contents) • Economic Benefit • Promotion of foreign relations in the Gulf Region

  4. Cross Border Investment Flows Investment by Saudi Arabia: • In 2004,total investments by Saudi Arabia in South Africa were R3,9 billion • In 2005, total investment by Saudi Arabia into South Africa were (-R513 million+R2,408 billion)= R1,9 billion (negative balance results from a liability of R2,408 billion of dividends paid to Saudi Arabia) • Types of investments: Real Property, equity capital, etc… Investment by South Africa: • Investments by South Africa into Saudi Arabia are insignificant South Africa is net importer of investments

  5. Trade Flows • Exports to Saudi Arabia: • Exports to Saudi Arabia were:R1,5 billion in 2004, R1,9 billion in 2005 and R2,1 billion in 2006 • Main commodities exported: prepared foodstuffs, vegetable products, base metals, etc… • Imports from Saudi Arabia: • Imports from Saudi Arabia were:R17,1 billion in 2004, R19,4 billion in 2005 and R24,5 billion in 2006 • Main commodities imported :oil, chemical products, etc…

  6. Cross Border Movement of Individuals • South African nurses, doctors, engineers working in Saudi Arabia • Exchange of tourists between the two countries • Students from Saudi Arabia studying in South Africa universities

  7. Other Issues • The treaty will promote foreign relations with Saudi Arabia in line with the policy of the Department of Foreign Affairs • South Africa is engaged with the negotiations of other bilateral agreements with Saudi Arabia (e.g. an Investment Protection Treaty)

  8. THANK YOU

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