Preliminary Hearings: Tax Treaties with Mexico, United Arab Emirates

1. Preliminary Hearings: Tax Treaties with Mexico, United Arab Emirates Select Committee on Finance 24 June 2008 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 SA/Mexico Treaty • Economic benefit • Increase and strengthen economic relations with the Latin American region • Interest by Mexico to have a tax treaty with South Africa

4. SA/Mexico Tax Treaty- Investment Flows Investment by Mexico: • Total investments by Mexico into South Africa were R35 million in 2004, R103 million in 2005 and R202 million in 2006 Investment by South Africa: • Total investments by South Africa into Mexico were R239 million in 2004, R243 million in 2005 and R220 million in 2006 • Amongst African countries, South Africa is the fifth investor in Mexico • Some of the South African companies or representative offices operating in Mexico are Alexander Forbes, Dimension Data, Gencor, Anglo American, Standard Bank, Sasol.

5. SA/Mexico Tax Treaty-Trade Flows • Exports to Mexico: • Exports to Mexico were: R824, 7 million in 2004, R927 million in 2005, R1,48 billion in 2006 and R1,28 billion in 2007 • Main exports: base metals chemical products, • Imports from Mexico: • Imports from Mexico were: R708 million in 2004, R1,1 billion in 2005, R1,9 billion in 2006 and R2,1 billion in 2007 • Main imports :machinery, mechanical appliances, electrical

6. Reasons for the SA/UAE Tax Treaty • Economic benefit • Strengthening of relations with the countries in the Middle East

7. Economic Developments • UAE has consistently been among the top five of the SA trading partners in the Middle East • Approximately more than 30 S A companies or satellite offices are operating in UAE. SA companies such as LTA and Murray & Roberts have been involved in major construction projects in the UAE, for example, expansion of Dubai International Airport , building of Arab Tower Hotel • Other SA companies or satellite offices operating in UAE include the following: Sasol Middle East, Woolworths, Young Designer Emporium, Dimension Data, Multi Choice Middle East • SAA enhanced its code sharing agreement with Emirates that will increase travel between the two countries: Daily flights between Cape Town & Dubai and 3 flights a day between Johannesburg & Dubai • UAE hosts the largest community of SA expatriates in the Middle East • Dubai World, investment group that represents the Government of Dubai, has assisted in developing SA tourism with the acquisition of majority stakes in three SA game reserves, Shamwari, Sanbona, Jock Safari Lodge game reserves and in V& A Waterfront

8. SA/UAE Tax Treaty- Investment Flows Investment by UAE: • Total investments by UAE into South Africa were R262 million in 2004, R197 million in 2005 and R683 million in 2006 Investment by South Africa: • Total investments by South Africa into UAE were R81million in 2004, R76 million in 2005 and R2,8 billion in 2006

9. SA/UAE Tax Treaty-Trade Flows • Exports to UAE: • Exports to UAE were: R2,4 billion in 2004, R2,9 billion in 2005, R3,9 billion in 2006 and R5,6 billion in 2007 • Main exports: chemical products, machinery & mechanical appliances, base metals • Imports from UAE: • Imports from UAE were: R702 million in 2004, R2,6 billion in 2005, R3,9 billion in 2006 and R4,8 billion in 2007 • Main imports :mineral products, chemical products, articles of stone, plaster, cement, asbestos

10. THANK YOU