South Africa
42.
Agreement for Avoidance of double taxation and fiscal evasion with foreign
countries
Whereas the annexed agreement between the
Government of the Republic of India and the Government of the Republic of South
Africa for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income,
has entered into force on the twenty-eighth day of November, 1997, in
accordance with Article 28 of the said Agreement, after the notification by
both the contracting States to each other of the completion of the procedures
required under their laws for the bringing into force of the said agreement;
Now, therefore, in exercise of the powers
conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central
Government hereby directs that all the provisions of the said agreement shall
be given effect to in the Union of India.
Notification
: No. GSR 198(E), dated
21-4-1998.
Annexure
Agreement Between the Government of the
Republic of India and the Government of the Republic of South Africa for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income
Preamble
The Government of the Republic of India and the Government of the
Republic of South Africa desiring to conclude an Agreement for the avoidance of
double taxation and the prevention of fiscal evasion with respect to taxes on
income,
Have agreed as follows :
Article 1 :
Personal scope - This Agreement shall apply to persons who are residents
of one or both of the Contracting States.
Article 2 :
Taxes covered - 1. The existing taxes to which this Agreement
shall apply are :
(a) in India, the income-tax (including any
surcharge thereon);
(hereinafter
referred to as “Indian tax”);
(b) in South Africa :
(i) the income-tax (the normal tax); and
(ii) the secondary tax on companies;
(hereinafter referred to as “South
African tax”).
2.. The Agreement shall
apply also to any identical or substantially similar taxes which are imposed by
either Contracting State after the date of signature of the Agreement in
addition to, or in place of, the existing taxes. The competent authorities of
the Contracting States shall notify each other of any significant changes which
have been made in their respective taxation laws.
Article 3 :
General definitions - 1. For the purposes of this Agreement,
unless the context otherwise requires :
(a) the term “India” means the territory of the
Republic of India and includes the territorial sea and air space above it. For
the purposes of this Agreement, the term shall cover any other maritime zone in
which the Republic of India has sovereign rights, other rights and
jurisdictions, according to the Indian law and in accordance with international
law in particular as laid down in the UN Convention of the Law of the Sea,
1982; and
(b) the term “South Africa” means the Republic of
South Africa and, when used in a geographical sense, includes the territorial
sea thereof as well as any area outside the territorial sea, including the
continental shelf, which has been or may hereafter be designated, under the
laws of South Africa and in accordance with international law, as an area
within which South Africa may exercise sovereign rights or jurisdiction;
(c) the terms “a Contracting State” and “the other
Contracting State” mean India or South Africa, as the context requires;
(d) the term “company” means any body corporate or
any entity which is treated as a company or body corporate for tax purposes;
(e) the term “competent authority” means :
(i) in India, the Central Government in the
Ministry of Finance (Department of Revenue) or their authorised representative;
and
(ii) in South Africa, the Commissioner for Inland
Revenue or his authorised representative;
(f) the terms “enterprise of a Contracting State”
and “enterprise of the other Contracting State” mean respectively an enterprise
carried on by a resident of a Contracting State and an enterprise carried on by
a resident of the other Contracting State;
(g) the term “fiscal year” means :
(i) in India, the twelve-month period beginning on
1st April;
(ii) in South Africa, the “year of assessment” as
defined in the Income-tax Act, 1962;
(h) the term “international traffic” means any
transport by a ship or aircraft operated by an enterprise of a Contracting
State, except when the ship or aircraft is operated solely between places in
the other Contracting State;
(i) the term “national” means :
(i) any individual possessing the nationality of a
Contracting State;
(ii) any legal person or association deriving its
status as such from the laws in force in a Contracting State;
(j) the term “person” includes an individual, a
company and any other body of persons which is treated as an entity for tax
purposes under the taxation laws in force in the respective Contracting States;
and
(k) the term “tax” means Indian tax or South
African tax, as the context requires, but shall not include any amount which is
payable in respect of any default or omission in relation to the taxes to which
this Agreement applies or which represents a penalty imposed relating to those
taxes.
2. As regards the
application of the provisions of the Agreement at any time by a Contracting
State, any term not defined therein shall, unless the context otherwise
requires, have the meaning which it has at that time under the law of that
State for the purposes of the taxes to which the Agreement applies, any meaning
under the applicable tax laws of that State prevailing over a meaning given to
the term under other laws of that State.
Article 4 : Resident - 1. For the purposes of this Agreement,
the term “resident of a Contracting State” means :
(a) in India, any person who, under the laws of
India, is liable to tax therein by reason of his domicile, residence, place of
management or any other criterion of a similar nature, but this term does not
include any person who is liable to tax in India in respect only of income from
sources in India;
(b) in South Africa, any individual who is ordinarily resident in South
Africa and any other person which has its place of effective management in
South Africa.
2. Where by reason of the provisions of
paragraph 1, an individual is a resident of both Contracting States, then his
status shall be determined as follows :
(a) he shall be deemed to be a resident only of the State in which he
has a permanent home available to him; if he has a permanent home available to
him in both States, he shall be deemed to be a resident of the State with which
his personal and economic relations are closer (centre of vital interests);
(b) if the State in which he has his centre of vital interests cannot
be determined, or if he has not a permanent home available to him in either
State, he shall be deemed to be a resident only of the State in which he has an
habitual abode;
(c) if he has an habitual abode in both States or in neither of them,
he shall be deemed to be a resident only of the State of which he is a
national;
(d) if he is a national of both States or of neither of them, the
competent authorities of the Contracting States shall settle the question by
mutual agreement.
3. Where by
reason of the provisions of paragraph 1, a person other than an individual is a
resident of both Contracting States, then it shall be deemed to be a resident
only of the State in which its place of effective management is situated. If
the State in which its place of effective management is situated cannot be
determined, then the competent authorities of the Contracting States shall
settle the question by mutual agreement.
Article 5 : Permanent
establishment - 1. For the purposes of this Agreement, the term
“permanent establishment” means a fixed place of business through which the
business of an enterprise is wholly or partly carried on.
2. The term “permanent establishment” includes
especially :
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place of extraction
of natural resources, including an installation or structure used for the
exploration or exploitation of natural resources; and
(g) a warehouse, in relation to a person providing storage facilities
for others.
3. A building site, a construction,
installation or assembly project or any supervisory activity in connection with
such site or project constitutes a permanent establishment only if it lasts
more than six months.
4.
Notwithstanding the preceding provisions of this Article, the term “permanent
establishment” shall be deemed not to include :
(a) the use of facilities solely for the purpose of storage, display or
delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose
of purchasing goods or merchandise, or for collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose
of carrying on, for the enterprise, any other activity of a preparatory or
auxiliary character; and
(f) the maintenance of a fixed place of business solely for any
combination of activities mentioned in sub-paragraphs (a) to (e),
provided that the overall activity of the fixed place of business resulting
from this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs
1 and 2, where a person - other than an agent of an independent status to whom
paragraph 6 applies - is acting on behalf of an enterprise and has, and habitually
exercises, in a Contracting State an authority to conclude contracts in the
name of the enterprise, that enterprise shall be deemed to have a permanent
establishment in that State in respect of any activities which that person
undertakes for the enterprise, unless the activities of such person are limited
to those mentioned in paragraph 4 which, if exercised through a fixed place of
business, would not make this fixed place of business a permanent establishment
under the provisions of that paragraph.
6. An enterprise shall not be deemed to have a
permanent establishment in a Contracting State merely because it carries on
business in that State through a broker, general commission agent or any other
agent of an independent status, provided that such persons are acting in the
ordinary course of their business.
7. The fact that a company which is a resident
of a Contracting State controls or is controlled by a company which is a
resident of the other Contracting State, or which carries on business in that
other State (whether through a permanent establishment or otherwise), shall not
of itself constitute either company a permanent establishment of the other.
Article 6 : Income from
immovable property - 1. Income derived by a resident of a
Contracting State from immovable property, including income from agriculture or
forestry, situated in the other Contracting State may be taxed in that other
State.
2. The term “immovable property” shall have the
meaning which it has under the law of the Contracting State in which the
property in question is situated. The term shall in any case include property
accessory to immovable property, livestock and equipment used in agriculture
and forestry, rights to which the provisions of general law respecting landed
property apply, usufruct of immovable property and rights to variable or fixed
payments as consideration for the working of, or the right to work, mineral
deposits, sources and other natural resources. Ships, boats and aircraft shall
not be regarded as immovable property.
3. The provisions of paragraphs 1 shall apply
to income derived from the direct use, letting or use in any other form of
immovable property.
4. The provisions of paragraphs 1 and 3 shall
also apply to the income from immovable property of an enterprise and to income
from immovable property used for the performance of independent personal
services.
Article 7 : Business profits
- 1. The profits of an enterprise of a Contracting State shall be
taxable only in that State unless the enterprise carries on business in the
other Contracting State through a permanent establishment situated therein. If
the enterprise carries on business as aforesaid, the profits of the enterprise
may be taxed in the other State but only so much of them as is attributable to that
permanent establishment.
2. Subject to the provisions of paragraph 3,
where an enterprise of a Contracting State carries on business in the other
Contracting State through a permanent establishment situated therein, there
shall in each Contracting State be attributed to that permanent establishment
the profits which it might be expected to make if it were a distinct and
separate enterprise engaged in the same or similar activities under the same or
similar conditions and dealing wholly independently with the enterprise of
which it is a permanent establishment.
3. In determining the profits of a permanent
establishment, there shall be allowed as deductions expenses which are incurred
for the purposes of the permanent establishment, including executive and general
administrative expenses so incurred, whether in the Contracting State in which
the permanent establishment is situated or elsewhere, in accordance with and
subject to the limitations prescribed in the taxation laws in that Contracting
State.
4. Insofar as it has been customary in a
Contracting State to determine the profits to be attributed to a permanent
establishment on the basis of an apportionment of the total profits of the
enterprise to its various parts, nothing in paragraph 2 shall preclude that
Contracting State from determining the profits to be taxed by such an
apportionment as may be customary. The method of apportionment adopted shall,
however, be such that the result shall be in accordance with the principles
contained in this Article.
5. No profits shall be attributed to a permanent
establishment by reason of the mere purchase by that permanent establishment of
goods or merchandise for the enterprise.
6. For the purposes of the preceding paragraphs,
the profits to be attributed to the permanent establishment shall be determined
by the same method year by year unless there is good and sufficient reason to
the contrary.
7. Where profits include items of income which
are dealt with separately in other Articles of this Agreement, then the
provisions of those Articles shall not be affected by the provisions of this
Article.
Article 8 : Shipping and air
transport - 1. Profits of an enterprise of a Contracting State from
the operation of ships or aircraft in international traffic shall be taxable
only in that State.
2. For the
purposes of this Article, profits from the operation of ships or aircraft in
international traffic shall include :
(a) profits derived from the rental on a bare boat basis of ships or aircraft
used in international traffic,
(b) profits derived from the use or rental of containers,
if such
profits are incidental to the profits to which the provisions of paragraph 1
apply.
3. For the purposes of this Article, interest on
funds connected with the operation of ships or aircraft in international
traffic shall be regarded as profits derived from the operation of such ships
or aircraft and the provisions of Article 11 shall not apply in relation to
such interest.
4. The provisions of paragraph 1 shall also
apply to profits from the participation in a pool, a joint business or an
international operating agency.
Article 9 : Associated
enterprises - 1. Where :
(a) an enterprise of a Contracting State participates directly or
indirectly in the management, control or capital of an enterprise of the other
Contracting State; or
(b) the same persons participate directly or indirectly in the
management, control or capital of an enterprise of a Contracting State and an
enterprise of the other Contracting State,
and in either
case conditions are made or imposed between the two enterprises in their
commercial or financial relations which differ from those which would be made
between independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by reason of those
conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly.
2. Where a Contracting State includes in the
profits of an enterprise of that State - and taxes accordingly - profits on
which an enterprise of the other Contracting State has been charged to tax in
that other State and the profits so included are profits which would have
accrued to the enterprise of the first-mentioned State if the conditions made
between the two enterprises had been those which would have been made between
independent enterprises, then that other State shall make an appropriate
adjustment to the amount of the tax charged therein on those profits if that
other State considers the adjustment justified. In determining such adjustment,
due regard shall be had to the other provisions of this Agreement and the
competent authorities of the Contracting States shall if necessary consult each
other.
Article 10 : Dividends - 1.
Dividends paid by a company which is a resident of a Contracting State to a
resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in
the Contracting State of which the company paying the dividends is a resident
and according to the laws of that State, but if the beneficial owner of the
dividends is a resident of the other Contracting State, the tax so charged
shall not exceed 10 per cent of the gross amount of the dividends.
The competent
authorities of the Contracting States shall settle the mode of application of
these limitations by mutual agreement.
This paragraph
shall not affect the taxation of the company in respect of the profits out of
which the dividends are paid.
3. The term “dividends” as used in this Article
means income from shares or other rights participating in profits (not being
debt-claims), as well as income from other corporate rights which is subjected
to the same taxation treatment as income from shares by the laws of the Contracting
State of which the company making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall
not apply if the beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting State of which
the company paying the dividends is a resident, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the holding in
respect of which the dividends are paid is effectively connected with such
permanent establishment or fixed base. In such case, the provisions of Article
7 or Article 14, as the case may be, shall apply.
5. Where a company which is a resident of a
Contracting State derives profits or income from the other Contracting State,
that other State may not impose any tax on the dividends paid by the company,
except insofar as such dividends are paid to a resident of that other State or
insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or a fixed base situated
in that other State, nor subject the company’s undistributed profits to a tax
on undistributed profits, even if the dividends paid or the undistributed profits
consist wholly or partly of profits or income arising in such other State.
Article 11 : Interest - 1.
Interest arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in
the Contracting State in which it arises and according to the laws of that
State, but if the recipient is the beneficial owner of the interest the tax so
charged shall not exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraphs
1 and 2, interest arising in a Contracting State shall be exempt from tax in
that State if it is derived and beneficially owned by :
(a) the Government, a political sub-division or a local authority of
the other Contracting State;
(b) the Reserve Bank of India or the South African Reserve Bank; or
(c) any agency or instrumentally which is wholly owned by the
Government of a Contracting State and which has been approved in writing by the
competent authorities of the Contracting States for the purposes of this
paragraph.
4. The term “interest” as used in this Article
means income from debt-claims of every kind, whether or not secured by mortgage
and whether or not carrying a right to participate in the debtor’s profits, and
in particular, income from Government securities and income from bonds or
debentures, including premiums and prizes attaching to such securities, bonds
or debentures. Penalty charges for late payment shall not be regarded as
interest for the purposes of this Article.
5. The provisions of paragraph 1 shall not apply
if the beneficial owner of the interest, being a resident of a Contracting
State, carries on business in the other Contracting State in which the interest
arises, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein,
and the debt-claim in respect of which the interest is paid is effectively
connected with such permanent establishment or fixed base. In such case, the
provisions of Article 7 or Article 14, as the case may be, shall apply.
6. Interest shall be deemed to arise in a
Contracting State when the payer is that State itself, a political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the interest, whether he is a resident of a Contracting State
or not, has in a Contracting State a permanent establishment or a fixed base in
connection with which the indebtedness on which the interest is paid was
incurred, and such interest is borne by such permanent establishment or fixed
base, then such interest shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship
between the payer and the beneficial owner or between both of them and some
other person, the amount of the interest, having regard to the debt-claim for
which it is paid, exceeds the amount which would have been agreed upon by the payer
and the beneficial owner in the absence of such relationship, the provisions of
this Article shall apply only to the last-mentioned amount. In such case, the
excess part of the payments shall remain taxable according to the laws of each
Contracting State, due regard being had to the other provisions of this
Agreement.
Article 12 : Royalties and
fees for technical services - 1. Royalties or fees for technical
services arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.
2. However, such royalties or fees for technical
services may also be taxed in the Contracting State in which they arise, and
according to the laws of that State, but if the recipient is the beneficial
owner of the royalties or fees for technical services, the tax so charged shall
not exceed 10 per cent of the gross amount of the royalties or fees for
technical services.
3. The term “royalties” as used in this Article
means payments of any kind received as a consideration for the use of, or the
right to use, any copyright of literary, artistic or scientific work (including
cinematograph films and films, tapes or discs for radio or television
broadcasting), any patent, trade mark, design or model, plan, secret formula or
process, or for the use of, or the right to use, industrial, commercial or
scientific equipment, or for information concerning industrial, commercial or
scientific experience.
4. The term “fees for technical services” as
used in this Article means payments of any kind received as a consideration for
services of a managerial, technical or consultancy nature, including the
provision of services by technical or other personnel, but does not include
payments for services mentioned in Article 15.
5. The provisions of paragraphs 1 and 2 shall
not apply if the beneficial owner of the royalties or fees for technical
services, being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties or fees for technical services arise,
through a permanent establishment situated therein, or performs in that other
State independent personal services from a fixed base situated therein, and the
right, property or contract in respect of which the royalties or fees for
technical services are paid is effectively connected with such permanent
establishment or fixed base. In such case, the provisions of Article 7 or
Article 14, as the case may be, shall apply.
6. Royalties or fees for technical services
shall be deemed to arise in a Contracting State when the payer is that State
itself, a political sub-division, a local authority or a resident of that
State. Where, however, the person paying the royalties or fees for technical
services, whether he is a resident of a Contracting State or not, has in a
Contracting State a permanent establishment or a fixed base with which the
right, property or contract in respect of which the royalties or fees for
technical services are paid is effectively connected, and such royalties or
fees for technical services are borne by such permanent establishment or fixed
base, then such royalties or fees for technical services shall be deemed to
arise in the State in which the permanent establishment or fixed base is
situated.
7. Where, by reason of a special relationship
between the payer and the beneficial owner or between both of them and some
other person, the amount of the royalties or fees for technical services
exceeds the amount which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the provisions of this
Article shall apply only to the last-mentioned amount. In such case, the excess
part of the payments shall remain taxable according to the laws of each
Contracting State, due regard being had to the other provisions of this
Agreement.
Article 13 : Capital gains -
1. Gains derived by a resident of a Contracting State from the
alienation of immovable property referred to in Article 6 and situated in the
other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property
forming part of the business property of a permanent establishment which an
enterprise of a Contracting State has in the other Contracting State or of
movable property pertaining to a fixed base available to a resident of a
Contracting State in the other Contracting State for the purpose of performing
independent personal services, including such gains from the alienation of such
a permanent establishment (alone or with the whole enterprise) or of such fixed
base, may be taxed in that other State.
3. Gains of an enterprise of a Contracting State
from the alienation of a ship or aircraft operated in international traffic or
movable property pertaining to the operation of such ships or aircraft, shall
be taxable only in that State.
4. Gains from the alienation of shares or
similar rights in a company, or of an interest in a partnership, trust or
estate, the assets of which consist principally of immovable property situated
in a Contracting State, may be taxed in that State.
5. Gains derived by a resident of a Contracting
State from the sale, exchange or other disposition, directly or indirectly, of
shares or similar rights in a company, other than those mentioned in paragraph 4,
which is a resident of the other Contracting State, may be taxed in that other
State.
6. Gains from the alienation of any property
other than that referred to in the preceding paragraphs, shall be taxable only
in the Contracting State of which the alienator is a resident.
Article 14 : Independent
personal services - 1. Income derived by an individual who is a
resident of a Contracting State in respect of professional services or other
activities of an independent character shall be taxable only in that State
unless he has a fixed base regularly available to him in other Contracting
State for the purpose of performing his activities. If he has such a fixed
base, the income may be taxed in the other State but only so much of it as is
attributable to that fixed base. For the purposes of this Agreement, where an
individual who is a resident of a Contracting State stays in the other
Contracting State for a period or periods exceeding in the aggregate 183 days
in any twelve months period commencing or ending in the fiscal year concerned,
he shall be deemed to have a fixed base regularly available to him in that
other State and the income that is derived from his activities that are
performed in that other State shall be attributable to that fixed base.
2. The term “professional services” includes
especially independent scientific, literary, artistic, educational or teaching
activities as well as the independent activities of physicians, lawyers,
engineers, architects, dentists and accountants.
Article 15 : Dependent
personal services - 1. Subject to the provisions of Articles 16, 18
and 19, salaries, wages and other similar remuneration derived by a resident of
a Contracting State in respect of an employment shall be taxable only in that
State unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived therefrom may be
taxed in that other State.
2. Notwithstanding the provisions of paragraph
1, remuneration derived by a resident of a Contracting State in respect of an
employment exercised in the other Contracting State shall be taxable only in
the first-mentioned State if :
(a) the recipient is present in the other State for a period or periods
not exceeding in the aggregate 183 days in any twelve months period commencing
or ending in the fiscal year concerned;
(b) the remuneration is paid by or on behalf of an employer who is not
a resident of the other State; and
(c) the remuneration is not borne by a permanent establishment or a fixed
base which the employer has in the other State.
3. Notwithstanding the preceding provisions of
this Article, remuneration derived in respect of an employment exercised aboard
a ship or aircraft operated in international traffic by an enterprise of a Contracting
State may be taxed in that State.
Article 16 : Directors’ fees -
Directors’ fees and similar payments derived by a resident of a Contracting
State in his capacity as a member of the board of directors of a company which
is a resident of the other Contracting State may be taxed in that other State.
Article 17 : Entertainers and
sportspersons - 1. Notwithstanding the provisions of Articles 7, 14
and 15, income derived by a resident of a Contracting State as an entertainer
such as a theatre, motion picture, radio or television artiste, or a musician,
or as a sportsperson, from his personal activities as such exercised in the
other Contracting State, may be taxed in that other State.
2. Where income in respect of personal
activities exercised by an entertainer or a sportsperson in his capacity as
such accrues not to the entertainer or sportsperson himself but to another
person, that income may, notwithstanding the provisions of Articles 7, 14 and
15, be taxed in the Contracting State in which the activities of the
entertainer or sportsperson are exercised.
3. Notwithstanding the provisions of paragraph
1, income derived by an entertainer or sportsperson from his personal
activities as such shall be exempt from tax in the Contracting State in which
these activities are exercised if the activities are exercised within the
framework of a visit which is wholly or mainly supported by the other
Contracting State, political sub-division, a local authority or public
institution thereof.
Article 18 : Pensions and
annuities - 1. Subject to the provisions of paragraph 2 of Article
19, pensions and other similar remuneration and annuities arising in a
Contracting State and paid to a resident of the other Contracting State, may be
taxed in the first-mentioned State.
2. The term “annuity” means a stated sum payable
periodically at stated times during life or during a specified or ascertainable
period of time under an obligation to make the payments in return for adequate
and full consideration in money or money’s worth.
Article 19 : Government
services - 1. (a) Salaries, wages and similar remuneration,
other than a pension, paid by a Contracting State or a political sub-division
or a local authority thereof to an individual in respect of services rendered
to that State or sub-division or authority shall be taxable only in that State.
(b)
However, such salaries, wages and similar remuneration shall be taxable only in
the other Contracting State if the services are rendered in that State and the
individual is a resident of that State who :
(i) is a national of that State; or
(ii) did not become a resident of that State solely
for the purpose of rendering the services.
2. (a) Any pension paid by, or out of
funds created by, a Contracting State or a political sub-division or a local
authority thereof to an individual in respect of services rendered to that
State or sub-division or authority shall be taxable only in that State.
(b)
However, such pension shall be taxable only in the other Contracting State if
the individual is a resident of, and a national of, that State.
3. The provisions of Article 15, 16, 17 or 18
shall apply to salaries, wages and similar remuneration, and to pensions, in
respect of services rendered in connection with a business carried on by a
Contracting State or a political sub-division or a local authority thereof.
Article 20 : Students,
apprentices and business trainees - 1. A student, apprentice or
business trainee who is present in a Contracting State solely for the purpose of
his education or training and who is, or immediately before being so present
was, a resident of the other Contracting State, shall be exempt from tax in the
first-mentioned State on payments received from outside that first-mentioned
State for the purposes of his maintenance, education or training.
2. Payments which a student or business
apprentice receives as remuneration from employment in the first-mentioned
State, in an amount not exceeding a sum equivalent to 3000 US dollars in the
currency of the first-mentioned State during any fiscal year shall be exempt
from tax in the first-mentioned State during the period ending five years after
the date of his first arrival in the first-mentioned Contracting State.
Article 21 : Other income -
Items of income arising in a Contracting State which are not dealt with in the
foregoing Articles of this Agreement may be taxed in that State.
Article 22 : Elimination of
double taxation - Double taxation shall be eliminated as follows :
(a) In India, where a resident of India derives income which, in
accordance with the provisions of this Agreement, may be taxed in South Africa,
India shall allow as a deduction from the tax on the income of that resident an
amount equal to the South African tax paid, whether directly or by deduction.
Such deduction shall not, however, exceed that part of the income-tax (as
computed before the deduction is given) which is attributable to the income
which may be taxed in South Africa.
(b) In South Africa, Indian tax paid by residents of South Africa in
respect of income taxable in India, in accordance with the provisions of the
Agreement, shall be deducted from the taxes due according to South African
fiscal law. Such deduction shall not, however, exceed an amount which bears to
the total South African tax payable the same ratio as the income concerned
bears to the total income.
Article 23 : Non-discrimination
- 1. Nationals of a Contracting State shall not be subjected in the
other Contracting State to any taxation or any requirement connected therewith
which is other or more burdensome than the taxation and connected requirements
to which nationals of that other State in the same circumstances are or may be
subjected. This provision shall notwithstanding the provisions of Article 1,
also apply to persons who are not residents of one or both of the Contracting
States.
2. The taxation on a permanent establishment
which an enterprise of a Contracting State has in the other Contracting State
shall not be less favourably levied in that other State than the taxation
levied on enterprises of that other State carrying on the same activities. This
provision shall not be construed as preventing a Contracting State from
charging the profits of a permanent establishment which a company of the other
Contracting State has in the first-mentioned State at a rate of tax which is
not more than 10 percentage points higher than that imposed on the profits of a
similar company of the first-mentioned Contracting State, nor as being in
conflict with the provisions of paragraph 3 of Article 7 of this Agreement.
3. Nothing contained in this Article shall be
construed as obliging a Contracting State to grant to residents of the other
Contracting State any personal allowances, reliefs and reductions for taxation
purposes on account of civil status or family responsibilities which it grants
to its own residents.
4. Enterprises of a Contracting State, the
capital of which is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other Contracting State, shall not
be subjected in the first-mentioned State to any taxation or any requirement
connected therewith which is other or more burdensome than the taxation and
connected requirements to which other similar enterprises of that first-mentioned
State are or may be subjected.
5. Except where the provisions of paragraph 1 of
Article 9, paragraph 5 of Article 11 or paragraph 6 of Article 12 apply,
interest, royalties, fees for technical services and other disbursements paid
by an enterprise of a Contracting State to a resident of the other Contracting
State shall, for the purpose of determining the taxable profits of such
enterprise, be deductible under the same conditions as if they had been paid to
a resident of the first-mentioned State.
6. In this Article, the term “taxation” means
taxes which are the subject of the Agreement.
Article 24 : Mutual agreement
procedure - 1. Where a person considers that the actions of one or
both of the Contracting States result or will result for him in taxation not in
accordance with this Agreement, he may, irrespective of the remedies provided
by the domestic law of those States, present his case to the competent
authority of the Contracting State of which he is a resident or, if his case
comes under paragraph 1 of Article 23, to that of the Contracting State of
which he is a national. The case must be presented within three years from the
first notification of the action resulting in taxation not in accordance with
the Agreement.
2. The competent authority shall endeavour, if
the objection appears to it to be justified and if it is not itself able to
arrive at a satisfactory solution, to resolve the case by mutual agreement with
the competent authority of the other Contracting State, with a view to the
avoidance of taxation which is not in accordance with the Agreement. Any
agreement reached shall be implemented notwithstanding any time-limits in the
domestic law of the Contracting States.
3. The competent authorities of the Contracting
States shall endeavour to resolve by mutual agreement any difficulties or
doubts arising as to the interpretation or application of the Agreement. They
may also consult together for the elimination of double taxation in cases not
provided for in the Agreement.
4. The competent authorities of the Contracting
States may communicate with each other directly for the purpose of reaching an
agreement in the sense of the preceding paragraphs. When it seems advisable in
order to reach agreement to have an oral exchange of opinions, such exchange
may take place through a joint commission consisting of representatives of the
competent authorities of the Contracting States.
Article 25 : Exchange of
information - 1. The competent authorities of the Contracting States
shall exchange such information, including documents, as is necessary for
carrying out the provisions of this Agreement or of the domestic laws of the
Contracting States concerning taxes covered by the Agreement insofar as the
taxation thereunder is not contrary to the Agreement. The exchange of
information is not restricted by Article 1. Any information received by a
Contracting State shall be treated as secret in the same manner as information
obtained under the domestic law of that State and shall be disclosed only to
persons or authorities (including courts and administrative bodies) concerned
with the assessment or collection of, the enforcement or prosecution in respect
of, or the determination of appeals in relation to, the taxes covered by the
Agreement. Such persons or authorities shall use the information only for such
purposes. They may disclose the information in public court proceedings or in
judicial decisions.
2. In no case shall the provisions of paragraph
1 be construed so as to impose on a Contracting State the obligation :
(a) to carry out administrative measures at variance with the laws or
the administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the laws or in
the normal course of the administration of that or of the other Contracting
State;
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or information,
the disclosure of which would be contrary to public policy (ordre public).
Article 26 : Assistance in
recovery - 1. The Contracting States shall, to the extent permitted
by their respective domestic law, lend assistance to each other in order to
recover the taxes referred to in Article 2 as well as interest and penalties
with regard to such taxes, provided that reasonable steps to recover such taxes
have been taken by the Contracting State requesting such assistance.
2. Claims which are the subject of requests for
assistance shall not have priority over taxes owing in the Contracting State
rendering assistance and the provisions of paragraph 1 of Article 25 shall also
apply to any information which, by virtue of this Article, is supplied to the
competent authority of a Contracting State.
3. The competent authorities of the Contracting
States shall by mutual agreement settle the mode of application of the
provisions of this Article.
Article 27 : Members of
diplomatic missions and consular posts - Nothing in this Agreement shall
affect the fiscal privileges of members of diplomatic missions or consular
posts under the general rules of international law or under the provisions of
special agreements.
Article 28 : Entry into force
- 1. Each of the Contracting States shall notify to the other the
completion of the procedures required by its law for the bringing into force of
this Agreement. The Agreement shall enter into force on the date of receipt of
the later of these notifications.
2. The provisions of the Agreement shall apply :
(a) in India :
(i) in respect of taxes withheld at source, for
amounts paid or credited in the fiscal year beginning in the calendar year next
following that in which the Agreement enters into force; and
(ii) in respect of other taxes, for any fiscal year
beginning in the calendar year next following that in which the Agreement
enters into force;
(b) in South Africa, in respect of fiscal years beginning on or after
the first day of January next following the date upon which the Agreement
enters into force.
Article 29 : Termination -
1. This Agreement shall remain in force indefinitely but either of the
Contracting States may terminate the Agreement through the diplomatic channel,
by giving to the other Contracting State written notice of termination not
later than 30th June of any calendar year starting five years after the year in
which the Agreement entered into force :
2. In such event, the Agreement shall cease to
apply :
(a) in India :
(i) in respect of taxes withheld at source, for amounts
paid or credited in the fiscal year beginning in the calendar year next
following that in which notice is given; and
(ii) in respect of other taxes, for any fiscal year
beginning in the calendar year next following that in which such notice is given;
(b) in South Africa, in respect of fiscal years beginning after the end
of the calendar year in which such notice is given.
IN WITNESS
WHEREOF the undersigned, being
duly authorised thereto, have signed this Agreement.
DONE at New Delhi in duplicate, this Fourth day of
December, 1996, in the English and Hindi languages, both texts being equally
authentic. In case of divergence in interpretation, the English text shall
prevail.
|
Sd/- |
Sd/- |
|
(P.
CHIDAMBARAM) |
ALEC ERWIN |
|
The Minister
of Finance |
The Minister of Trade and Industry |
|
For the
Government of |
For the Government of the |
|
the Republic
of India |
Republic of South Africa |
PROTOCOL
At the signing
of the Agreement concluded today between the Government of the Republic of India
and the Government of the Republic of South Africa for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income,
the undersigned have agreed that the following provisions shall form an
integral part of the said Agreement :
1. With reference to any provision of the
Agreement in terms of which income derived by a resident of a Contracting State
may be taxed in the other Contracting State, it is understood that such income
may, subject to the provisions of Article 22, also be taxed in the
first-mentioned Contracting State.
2. With reference to paragraph 1 of Article 7,
it is understood that where a permanent establishment which an enterprise of a
Contracting State has in the other Contracting State, participates, itself or
together with other parts of that enterprise or with an associated enterprise,
in the negotiation, conclusion or fulfilment of a contract entered into by that
enterprise or associated enterprise, there shall be attributed to the permanent
establishment that portion of the profits of the contract arising in the other
State as relates to the contribution by the permanent establishment to the
negotiation, conclusion or fulfilment of the contract.
3. With reference to paragraph 3 of Article 7,
it is agreed that the limitations referred to therein shall in no event be less
than those prevailing on the day of the signing of the Agreement.
IN WITNESS
WHEREOF the undersigned, being
duly authorised thereto, have signed this Protocol.
DONE at New Delhi in duplicate, this Fourth day of
December, 1996, in the English and Hindi languages, both texts being equally
authentic. In case of any divergence in interpretation, the English text shall
prevail.