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The Double Taxation Convention with the Republic of South Africa which forms the Schedule to this Order applies to death duties and gift taxes. The taxes covered by the Convention are the United Kingdom capital transfer tax and the South African estate duty and donations tax. The Convention will also apply to any tax of a substantially similar character which may be imposed by either country.
Under the Convention, the country in which the transferor was domiciled can tax property wherever it is situated. The other country can normally tax only specified categories of property, namely immovable property situated in its territory, business property of a permanent establishment or a fixed base in its territory, certain ships and aircraft and shares or debentures of companies incorporated in its territory. The other country may impose tax also if the transferor had been domiciled within any part of its territory within the 10 years immediately preceding the transfer. Where the transferor was domiciled in neither country both countries may tax. There is a special rule for settled property.
Where both countries impose tax, the Convention provides rules for determining which country is to give credit for the other's tax. In general, the country in which the transferor was not domiciled is required to give credit. But the country in which the transferor was domiciled is required to give credit for the other country's tax on the specified categories of property.
Rules are provided for determining a person's domicile for the purposes of the Convention.
There are provisions for resolving conflicts as to the nature of property and for dealing with cases in which tax, though chargeable, is not paid.
There are also provisions for safeguarding nationals of one country against discriminatory taxation in the other country and for the exchange of information and consultation between the taxation authorities of the two countries.
The Convention applies to any person who is within the scope of a tax which is covered by the Convention.
The Convention has effect in the United Kingdom in respect of transfers giving rise to a tax charge on or after 1st January 1978 and in South Africa in respect of donations taking effect and the estates of persons dying on or after 1st January 1978.
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