Zim-SA seal historic tax, fiscal agreement South Africa Minister of Finance Nhlanhla Nene (left) and his Zimbabwe counterpart Patrick Chinamasa sign an agreement on avoidance of double taxation at a Bulawayo hotel yesterday
South Africa Minister of Finance Nhlanhla Nene (left) and his Zimbabwe counterpart Patrick Chinamasa  sign an agreement on avoidance of double taxation at a Bulawayo hotel yesterday

South Africa Minister of Finance Nhlanhla Nene (left) and his Zimbabwe counterpart Patrick Chinamasa sign an agreement on avoidance of double taxation at a Bulawayo hotel yesterday

Pamela Shumba Senior Reporter
ZIMBABWE and South Africa yesterday signed a Memorandum of Understanding (MoU) on avoidance of double taxation and prevention of fiscal evasion in a move aimed at protecting tax payers and improving bilateral relations between the two countries.

The agreement is meant to clarify, standardise and guarantee fiscal treatment of tax payers who engage in business in the two countries.

Finance and Economic Development Minister Patrick Chinamasa and his South African counterpart Nhlanhla Nene signed the historic agreement in Bulawayo before touring industries in the city.

Chinamasa said the signing of the agreement was significant as it elevates the bilateral relationship between the two neighbouring countries to a new level.

“This agreement brings certainty on the taxation rights of investors from both Zimbabwe and South Africa as we engage in bilateral trade and investment activities across our national borders,” said Chinamasa soon after signing the agreement at a city hotel.

“It’s envisaged that the agreement will, no doubt, further deepen our bilateral relations and will serve the mutual interests of both countries.”

Chinamasa said the signing of the MoU was a milestone achievement that would foster stronger economic co-operation between the two countries and help protect the countries’ tax base.

“Given that South Africa is Zimbabwe’s largest trading partner, with trade between the two countries reaching over $8 billion in 2014, signing the avoidance of double taxation agreement will indeed facilitate business between the two countries.

“I’m therefore confident that this agreement will encourage further flow of investment between our two countries thereby promoting sustainable economic growth and development in our respective economies which will go a long way in creating employment and eradicating poverty,” said Chinamasa.

He commended officials from Zimbabwe and South Africa for working tirelessly to ensure the finalisation of the agreement.

Chinamasa said he was confident that both parties would ensure that the process of the ratification of the agreement would be expedited in order to bring it into force for the benefit of tax payers and administration authorities.

Nene concurred with Chinamasa, saying the underlying principle for entering into the agreement was to create a favourable environment for investment in both states.

“This is a significant milestone for both countries. It’s important to note that the imposition of similar taxes in the two countries on income earned by the same taxpayers has detrimental effects on the exchange of goods and services.

“This agreement offers reduced rates of tax on dividends, interest, royalties and technical fees earned in the two countries by companies or individuals of the other state,” said Nene.

The permanent secretary in the Ministry of Finance and Economic Development, Willard Manungo, said Zimbabwe and South Africa were currently applying the provisions of the outdated avoidance of double taxation agreement that entered into force in 1965.

“It’s clear that the provisions of this agreement are no longer reflective of current international trends in investment, taxation and mobility of labour. It was, therefore, necessary that the two countries initiate the process of re-negotiating this agreement.

“The re-negotiation process was informed by structural changes in our economies, as well as international best practices with respect to the promotion of investment and co-operation in tax administration,” said Manungo.

 

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