Double Taxation Agreement Between Rwanda And South Africa

A closer look at the above provisions shows that, under the relevant DBA, Rwandan businesses owned and/or controlled by residents of other contracting states are not subject to heavier taxation and related requirements than those to which a business controlled by Rwandan residents is subject. If, in this context, a Rwandan company, which is controlled by the Turkish authorities controlled by residents, which can deduct administrative and technical charges and which is paid to its residents of control without any restriction other than that of the principle of the length of arms (ALP), may consider, in the cases it deals with the residents of the other contracting state, the refusal of the same treatment of a business controlled by residents of the other contracting state as discrimination with respect to the non-discrimination provisions of the property of the TBA. In the face of the increasing globalization of economic activity, characterized by the free movement of goods, capital and labour, more and more Rwandans are working outside Rwanda, doing business with or abroad, holding shares in non-resident companies and lending to non-resident borrowers. However, the tax treatment of foreign income from these activities in Rwanda continues to be subject to some uncertainty, particularly with regard to the simplification of double taxation. Some of the non-exempt foreign tax issues are unlikely to arise in cases where a double taxation agreement (“DBA”) is concluded between Rwanda and the foreign country of origin, which provides for States Parties to apply the double taxation relief mechanism. For example, Article 22 of the DBA with South Africa provides that South African taxes paid by Rwandan residents on taxable income in South Africa are deducted from taxes due under Rwandan tax law. It is clear that these provisions also apply to taxes paid on income such as dividends in South Africa. However, DBAs rarely address the presentation of unweighted taxes and, as a general rule, uncertainties remain in this regard. If the tax owed in the country of origin is greater than the tax due on the same income in Rwanda, the authorized tax credit cannot fully exempt a Rwandan resident taxed abroad from double taxation. Rwanda`s income tax law does not specify whether, in the coming years, an unse exempt foreign tax can be deferred to the application of tax due on foreign income. Dieudonn√© Nzafashwanayo (LLB, PGD, LLM) is a senior partner at ENSafrica (Kigali Office). He is admitted to Rwanda as a lawyer for the Supreme Court and other courts under his authority and concentrates his practice on the trade in taxes and businesses. Rwanda`s income tax law recognizes this potential double taxation and provides for relief from the foreign tax credit.

Under section 7 of the Income Tax Act, the Rwandan income tax that this resident must pay for these incomes is reduced by the amount of foreign tax payable on income when a Rwandan resident deducts income from “taxable activities abroad” for a taxable period. The authorized foreign tax credit must not exceed the amount of Rwandan tax that would be owed on income from foreign sources. However, the restrictive interpretation of Article 26, paragraph 1, paragraph 90, of Article 26, paragraph 90, is not related to all issues related to how they discourage the operation of multinational enterprises in Rwanda, since intra-group transactions in the field of administration and technical services and the licensing of intellectual property rights are the lifeblood of many multinationals.