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The application and interpretation by South African courts of general “renvoi” clauses in South African double taxation agreements’ (2019) 22 PER.

Article by: Jansen van Rensburg

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This article explored 4 interpretational issues that remain with regard to the application and interpretation of general renvoi clauses in Double Taxation Agreements (DTA’s) and how South African courts have dealt with these issues. The general renvoi clause in DTA’s is based on article 3(2) of the Model Tax Convention on Income and on Capital of the Organisation for Economic Co-operation and Development. This article provide that an undefined term in a DTA shall have the meaning that it has in the domestic law of the contracting state applying the DTA unless the context requires otherwise. The 4 issues are as follows:

  1. The ambulatory verus static approach: In  situations where  the  meaning  in  the  domestic  law  changed after the DTA had been concluded, the issue arises as to which  domestic  meaning  must  be  taken  into  account  under  this  general  renvoi  clause:  the  meaning  that  existed  when  the  DTA  was  concluded  (a  static approach),  or  the  meaning  that  existed  when  the  DTA  was  applied  (an ambulatory approach)?
  2. The use of a different expression in the domestic law – if  an  expression  other  than  the treaty  term  is  used  in  the  domestic  (tax)  law,  can  the  meaning  of  that expression  in the  domestic  law  be  taken  into  account for the purposes  of the general renvoi clause?
  3. The use of the deeming provisions in domestic law – if  an  expression  other  than  the treaty  term  is  used  in  the  domestic  (tax)  law,  can  the  meaning  of  that expression  in the  domestic  law  be  taken  into  account for the purposes  of the general renvoi clause?
  4. The domestic meaning as a “last resort” or as the “leading principle”
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