Research On Bilateral Tax Agreement Between China And South Africa

Karl Heinrich Marx once said:"Taxation is the economic foundation of governments,rather than anything else." Not only can taxes distributed the wealth and incomes fairlyamong the members of the society, it also can do good to investment promotion and rapiddevelopment of the economy, so the tax benefits are loved by all sovereigncountries.Therefore, Both multinational taxpayers and sovereign countries lay much stresson cross-border taxation.It is worthy of researching agreement between China and South Africa for theavoidance of double taxation and the prevention of fiscal evasion with respect to taxes onincome.Theoretically, it not only can enrich our theoretical study of international tax law,but also to make up for the vacancy on our study of specific bilateral tax treaty. In practice,it not only can enables readers to know agreement between China and South Africa for theavoidance of double taxation and the prevention of fiscal evasion with respect to taxes onincome, which is good for resident enterprises investing in South Africa, it also can servefor development and perfection of the agreement.The article consists of the introduction and other four parts. Introduction brieflydiscusses the cause of choosing this topic and the significance of research, describes theresearch trends home and abroad. Meanwhile, the article briefly summarizes the writingmethod and structure. The contents of remaining three parts are as follows:The first part concentrates on the backgrounds,historical significance andcharacteristics of tax treaty between China and South Africa.OECD Model DoubleTaxation Convention on Income and Capital and Model Agreement between developedcountries and developing countries on the avoidance of double taxation,China and SouthAfrica signing bilateral tax treaties with other countries and Actively diplomatic contactsbetween China and South Africa together lead to the birth of the tax treaty.In contrast toother tax treaties which is signed between China and African countries.Tax treaty betweenChina and South Africa does open a win-win situation on tax benefit between twocountries.The second part lay emphasis on contents of this Agreement. The first is validity oftax treaty between China and South Africa. In China, constitution does not involve validityand status between tax treaty and domestic tax law, only some special legislations stipulatethat tax treaty priors to domestic law. In South Africa, The tax treaty comes into effect in country only after it is transformed or incorporated into domestic taxlaw.Meanwhile,South Africa acknowledges the treaty can gain priority validity in theircountry. The second is interpretation of tax treaty between China and South Africa. Basedon the special law coming before general rules, paragraph2of article3of this agreement issuperior to <The Vienna Convention on the Law of Treaties>.The third is to divide taxjurisdiction. Aircraft and ship operated in international traffic, pensions and other similarremuneration, the government services belong to the category of exclusive jurisdiction.The taxation on nine kinds of income such as immovable property, royalties, dividends,interests can be shared by the two countries, but residence country have priority in taxjurisdiction. Only after Revenue Operating profit, independent and non-independentpersonal individual labor satisfy certain conditions,The country where these incomes comefrom have taxation power.The fourth is to summary avoiding double taxation measures inthis agreement. That varieties of methods such as Tax credit, tax-exemption method andthe limitation of withholding tax combine and complement each other shall contribute toease the pressure on the taxpayers.The third part puts forward several proposals according to hysteretic nature ofbilateral tax treaties between China and South Africa. Comparing bilateral tax treatiesbetween China and other countries, the part not only analyzes five shortcomings rangefrom modified form, information exchange issues, tax dispute arbitration clauses andanti-abuse provisions to the e-commerce environment, could be improved, it also putforward a number of recommendations.