1. Tax Treaty between South Africa & Saudi Arabia: Policy Rationale
Portfolio Committee on Finance
6 March 2007
Presented by Yanga Mputa
Tax Policy Unit :National Treasury
National Treasury

2. Purpose of Tax Treaties
Policy
Promote economic growth by providing certainty to cross border investments
Prevent double taxation of the same income through:
Certainty of tax treatment
Assignment of taxing rights between the two treaty countries
Administration
Exchange of information
Mutual Agreement Procedure

3. Reasons for the Saudi Arabian Treaty (Contents)
Economic Benefit
Promotion of foreign relations in the Gulf Region

4. Cross Border Investment Flows
Investment by Saudi Arabia:
In 2004, total investments by Saudi Arabia in South Africa were R3,9 billion
In 2005, total investment by Saudi Arabia into South Africa were (-R513 million+R2,408 billion)= R1,9 billion (negative balance results from a liability of R2,408 billion of dividends paid to Saudi Arabia)
Types of investments: Real Property, equity capital, etc…
Investment by South Africa:
Investments by South Africa into Saudi Arabia are insignificant
South Africa is net importer of investments

5. Trade Flows Exports to Saudi Arabia: Imports from Saudi Arabia:
Exports to Saudi Arabia were:R1,5 billion in 2004, R1,9 billion in 2005 and R2,1 billion in 2006
Main commodities exported: prepared foodstuffs, vegetable products, base metals, etc…
Imports from Saudi Arabia:
Imports from Saudi Arabia were:R17,1 billion in 2004, R19,4 billion in 2005 and R24,5 billion in 2006
Main commodities imported :oil, chemical products, etc…

6. Cross Border Movement of Individuals
South African nurses, doctors, engineers working in Saudi Arabia
Exchange of tourists between the two countries
Students from Saudi Arabia studying in South Africa universities

7. Other Issues
The treaty will promote foreign relations with Saudi Arabia in line with the policy of the Department of Foreign Affairs
South Africa is engaged with the negotiations of other bilateral agreements with Saudi Arabia (e.g. an Investment Protection Treaty)

8. THANK YOU