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It emerged last week that Botswana and South Africa have signed a new agreement on the avoidance of double taxation, designed to replace the treaty signed between the two countries in 1978.
Signed earlier this month by South African Finance Minister, Trevor Manuel, and Botswana's Finance and Development Planning Minister, Baledzi Gaolathe, a statement from the Ministry of Finance in Botswana explained that: 'The primary function of the agreement is to remove fiscal obstacles to bilateral trade and investment.'
According to reports in the local media, the previous agreement had become outdated, and did not provide for developments in the concept of international taxation. The Ministry of Finance confirmed this in a statement, explaining that the new DTA contains clauses relating to tax sparing, and addresses the tax implications of income allocation where a firm carries out part of its business in one country, and part in the other.
The new treaty will come into effect when it has been ratified by the Parliaments in Botswana and South Africa, and when both countries have notified each other of the completion of formalities.
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