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Essentials of International Tax Part 2 - How Residents Are Taxed On Foreign Transactions

Overview

This 4-part series provides an introduction to the basic principles that apply in international tax. The videos will take you through the key aspects that inform the South African tax treatment of international transactions, including –

• The concept of “residence”
• How residents and non-residents are taxed in South Africa
• Basic principles of Double Tax Agreements and how to use a Double Tax Agreement.

The series contains 3,25 hours of content and takes you through the main principles of international tax using examples to illustrate complex concepts.

Part 1: Introduction and the concept of “residence” (30 minutes)

This video introduces the series and explains how to determine whether a person is a “resident” for South African tax purposes, exploring the concepts of “ordinary residence”, “the physical presence test” and “place of effective management”.

Part 2: How residents are taxed on international transactions (1 hour)

In this video the presenter explains how a person that a “resident” under the Income Tax Act is taxed in South Africa on foreign income and capital gains. The video also discusses the deemed disposal that arises when a person ceases to be a resident. In addition, the video explains the principles of the foreign tax rebate provided in section 6quat of the Income Tax Act.

Part 3: How non-residents are taxed in South Africa (30 minutes)

The video explains how non-residents are taxed in South Africa on income and capital gains. The concept of “source” is explained and the video includes a discussion of the various withholding taxes that apply, including the dividends withholding tax, interest withholding tax, royalties withholding tax and the withholding tax on the sale of immovable property.

Part 4: Basic principles of Double Tax Agreements (45 minutes)

Double Tax Agreements play a crucial role in determining the tax liability on international transactions. This video explains the types of double tax and the role played by Double Tax Agreements. In the video, the presenter explains the different models and main features of Double Tax Agreements and takes you through a step-by-step process of how to apply a Double Tax Agreement in determining the South African tax liability on an international transaction.