In general, Germany provides for the progression exemption in order to avoid double taxation. However, dividends are exempt only to the extent that they are distributed by a South African company in which a German company holds at least 10% of the capital and where dividends in South Africa are not deductible. However, the credit method applies to a number of specific types of income (e.g. .B. (i) non-exempt dividends; (ii) capital gains from shares of South African companies whose assets consist mainly of fixed assets; (iii) fees of the directors of the enterprise; (iv) the income of artists and athletes; and (v) business income if the requirements of an activity clause are not met). South Africa provides for the credit method to avoid double taxation. In the case of a double taxation agreement (DTT), double taxation is generally avoided by exempting foreign income with progression. Foreign taxes can only be deducted from German income tax if the DTT provides for a tax credit or if there is no DTT. A tax credit is only possible up to the level of German income tax on concrete foreign income. The Ministry of Finance and the South African Revenue Service (SARS) gave lectures on the ratification of tax treaties with Germany and Mexico.
The Committee also had before it preliminary hearings on tax agreements with the State of Qatar, the Republic of Kenya, the Republic of Chile, the Kingdom of Lesotho and the Government of the Democratic Socialist Republic of Sri Lanka. The National Ministry of Finance looked into the reasons for the contracts and investment trade flows between South Africa and the countries concerned. SARS looked at the articles of the treaties and focused on those that were different from the normal South African approach. With regard to the ratification of the two treaties, the Committee asked about the discrepancies between imports and exports and the treaties signed by the member States. Several technical questions were raised concerning Articles 2, 5, 8, 13, 16 and 26 of the German Agreement. It was requested to clarify the content of the treaties and the best interests of South Africa. Concerns were expressed about the monitoring of treaties, the parliamentary process and the need for the committee to enter into these agreements earlier. These have been partly saturated by the consultation of the former Financial Portfolio Committee on these issues. With regard to the preliminary hearings, the committee asked questions about the timetable it had for consulting the documents. A number of minor technical questions were also asked and comments were made that welcomed the inclusion of the article on the different rules..
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