South Africa's Finance Minister, Trevor Manuel and Rob de Vos, Ambassador of the
Netherlands in South Africa, signed a protocol amending the tax convention between
the Netherlands and South Africa in Pretoria on Tuesday.
The Protocol amends the tax convention between the Netherlands and South Africa
signed in Pretoria in October 2005 which has not yet come into force.
The earlier convention was ratified in the Netherlands, but not in South Africa,
and because of an amendment of the tax law in South Africa, the government requested
an amendment of the tax convention.
The government of the Netherlands accepted South Africa’s request for
renegotiation of the convention. As a result of the renegotiations South Africa
and the Netherlands have concluded the most recent protocol.
The convention concerns taxes on income and on capital gains, and is intended
to avoid double taxation. In addition, the convention is intended to prevent
fiscal evasion and to provide for an exchange of fiscal information.
It replaces the old tax convention of 1971, and improves the conditions for
investment in both South Africa and the Netherlands.
According to the Dutch Finance Ministry:
"The most important benefits for the Netherlands are no withholding tax
on interest, a source state taxation on pensions, including lump sum payments,
an arbitration clause and a residence provision for pension funds. A 5% withholding
tax on participation dividends and a 10% withholding tax on portfolio dividends
is applicable. Furthermore, an extended article on exchange on information and
on assistance in recovery in conformity with the OECD Model Convention 2005
has been inserted."
"As a result of the signing of this protocol the tax convention can be
ratified in South Africa as well. The protocol has yet to be submitted for parliamentary
ratification in the Netherlands."
The Netherlands is currently the fifth largest destination of South African
exports. South Africa is the main trading partner of the Netherlands in Africa,
with exports totalling EUR1.6bn in 2007.
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