Department of Mercantile Law

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Browsing Department of Mercantile Law by browse.metadata.advisor "Du Toit, C. P."

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    A South African perspective on some critical issues regarding the OECD model tax convention on income and on capital, with special emphasis on its application to trusts
    (Stellenbosch : Stellenbosch University, 2014-12) Du Plessis, I.; De Waal, M. J.; Du Toit, C. P.; Stellenbosch University. Faculty of Law. Dept. of Private Law.
    ENGLISH ABSTRACT: Trusts are used for a variety of purposes, both in South Africa and abroad. Like so many other entities, trusts often do not function only in one jurisdiction and may therefore be exposed to international double taxation. South Africa, like most other states, enters into bi-lateral double taxation treaties, to limit the effects of international double taxation. Most of these treaties are based on the OECD Model Tax Convention on Income and on Capital (the OECD MTC). The South African trust is a unique creature. It is not based on the dual ownership concept on which most common law trusts are based, yet, it is not a juristic person either. The question that this research aims to address is how South Africa will interpret and apply certain provisions of the OECD MTC to trusts. Although the South African position is investigated, it is compared to the positions of the United Kingdom, Canada and the Netherlands. The dissertation starts with an analysis of the trust law in each of the relevant states, followed by an overview of the taxation regime governing trusts (and the parties thereto) in each state. The status of double taxation treaties and their interpretation are examined before certain critical provisions of the OECD MTC are analysed to determine how South Africa will apply these provisions to trusts. Hence it is explored whether a trust will be regarded as a person, whether it may be a resident and a beneficial owner for purposes of the OECD MTC. Furthermore, possible solutions for conflicts of attribution in the application of double tax conventions to trusts are investigated. The dissertation concludes that South Africa will regard a trust as a person for purposes of the OECD MTC. Moreover, some types of trusts may be viewed as residents and as beneficial owners for purposes of the OECD MTC. The solution proposed in the OECD’s Partnership Report should be applied to resolve conflicts of attribution involving trusts.