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. South Africans who live and earn in Australia are covered by this double taxation treaty. A double taxation treaty (DBA) is a legal agreement between two countries that specifies where the individual`s tax liability lies. A double taxation convention aims to prevent a taxable person from being taxed disproportionately, both in South Africa and in the country concerned mentioned in a given convention. Indeed, a DBA provides a legislative defense against double taxation and sets out many requirements that a person must meet to determine where they are as a tax resident. If the person is considered a tax resident, he is required to pay certain types of taxes on receipt, taking into account the corresponding DBA as well as the updated legislation on exemption from income tax for expatriates. 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. 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. On 15 May 2015, the Financial Court delivered a judgment on a question concerning the interpretation of the double taxation agreement between South Africa and the United States of America (DBA). In short, the facts were that two companies came to South Africa in 2007 to provide strategic and financial advisory services to a client based in South Africa. The contract for the provision of the services was concluded on the basis of: Pretoria: the South African Secretary of the Treasury, Mr. Nhlanhla Nene and the United States Ambassador to South Africa, Mr. Patrick H.
Gaspard, today signed an intergovernmental agreement to improve international tax compliance and implement the Foreign Account Tax Compliance Act. .