Double Taxation Agreement South Africa United States


Agreements between the two tax administrations of two countries should enable administrations to eliminate double taxation. Pretoria: South African Finance Minister Nhlanhla Nene and U.S. Ambassador to South Africa Patrick H. Gaspard today signed an intergovernmental agreement to improve international tax compliance and implement the Foreign Account Tax Compliance Act. This agreement promotes tax transparency between the two nations and also highlights the growing international cooperation to end tax evasion worldwide. In July 2012, the United States introduced the possibility for a country to enter into an intergovernmental agreement that would reduce the need for financial institutions to enter into an agreement directly with the United States. The Agreement on Improving International Tax Compliance and Implementing the Foreign Account Tax Compliance Act between the United States and South Africa is a mutual agreement that ensures that financial institutions in South Africa report information on U.S. account holders to the South African Revenue Service (SARS). In turn, SARS will transmit this information to the IRS through the Automatic Exchange of Information (AIA) under the U.S.-South Africa Double Taxation Convention. Conversely, the IRS will provide SARS-like information on South African account holders in the United States. For a full status of all DTAs and protocols, whether they are still under negotiation, already signed but not ratified in any of the Member States or if they are in force, we attach below a status document.

Ambassador Gaspard, who signed on behalf of the United States, said: “The signing of these agreements is an important step in the cooperation between the United States and South Africa to combat tax evasion. If foreign taxpayers avoid paying what they owe, other taxpayers have to bear a disproportionate share of the tax burden. The Intergovernmental Agreement on Improving International Tax Compliance and Implementing FATCA is an important part of the U.S. government`s efforts to address this issue. A DBA ensures that a taxable person is not unfairly taxed, both in South Africa and in the country concerned treated in a particular DBA. It therefore offers protection against double taxation and lays down various requirements that a taxable person must meet in order to understand where that taxable person is established as a tax resident.

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