There is no trap that has been set. The government of the Republic of South Africa recently concluded three agreements that relate to the avoidance of double taxation and the prevention of fiscal evasion. The tax treaty between South Africa and the Portuguese Republic and the tax treaty between South Africa and the Kingdom of Saudi Arabia are new treaties.
The tax treaty between South Africa and Switzerland is the renegotiation of an existing tax treaty. The first treaty between these two countries commenced in July 1968. The revised treaty, signed in May 2007, addressed issues not covered in the existing treaty. These agreements eliminate double taxation. This implies that where a resident from Saudi Arabia, the Swiss Confederation or the Portuguese Republic derives income which, in accordance with the provisions of these agreements, may be taxed in South Africa, their respective countries shall exempt such income from tax.
These agreements ensure that taxes are allocated more efficiently and that tax disputes are resolved more promptly. President Mbeki visited Saudi Arabia in March 2007. His visit yielded a new tax treaty between these countries. Saudi Arabia is a major supplier of crude oil to South Africa and it is also the third largest market for South African goods in the Middle East.
It does not levy income tax on its nationals. These exemptions are the religious tax, the personal income tax and business income tax imposed on non-Saudi nationals only. The aims of the treaty are to impose economic benefits and strengthen relations with Gulf region countries. With reference to the treaty with Switzerland, that is one that has given us an opportunity to go into your account; that is now an agreement with South Africa.
So you won't be able to take money from here and deposit it into the Swiss Bank and then think that we won't be able to access your account. With regard to this treaty between Switzerland and South Africa, two very significant changes have been included in the new treaty. Article 25 on the exchange of information and the item on protocol require elaboration. The article on exchange of information and protocol is introduced for the first time between South Africa and Switzerland.
It is an internationally known fact that Swiss financial institutions do not release data on their clients. Their domestic law on bank secrecy prevents the release of documentary evidence on their clients but, with the emergence of global consensus on money laundering - which is close to the heart of the hon Tau - doesn't have to support this money-laundering.
Owing to illegal trade and corporate governance, the Swiss have in essence retreated on their bank secrecy provisions. This treaty allows for the release of information by Swiss authorities if it can be proved that there is a direct link between tax fraud and the requested information. These changes are infrequent and mark a turning point in the crusade against money-laundering and similar practices.
Participating countries have rectified all agreements and the parliaments of these countries are expected to endorse them. South Africa's tax treaties with Portugal, Saudi Arabia and Switzerland are the outcomes that emerged from the negotiated settlements. Parliament is required to ratify these outcomes for which consensus has been achieved. The Select Committee on Finance is also aware that some treaties concluded previously by government officials have not been ratified by the parliaments of the countries which are signatories.
Current defaulters are in the main from the African continent. Clarity on the outstanding ratification should be an NCOP priority. The NCOP is seriously advised to endorse these agreements. I thank you.
Debate concluded.
Question put: That the Reports be adopted.
I shall now put the question. The question is that the report be adopted. As the decision is dealt with in terms of section 65 of the Constitution, I shall first ascertain whether all delegation heads are present in the Chamber.
In accordance with Rule 71, I shall first allow provinces an opportunity to make their declarations of vote if they so wish. Is there any province that wants to make a declaration?
We shall now proceed to the voting in alphabetical order. Eastern Cape?
Siyaxhasa. [We support.]
Free State?
Supports.
Gauteng?
Supports.
KwaZulu-Natal?
Mr Z C NTULI (KwaZulu-Natal): KwaZulu-Natal elethu. [KwaZulu-Natal supports.]
Limpopo?
Limpopo supports.
Mpumalanga?
Mpumalanga supports.
Northern Cape?
Northern Cape supports.
North West?
North West ke ya rona. [North West supports.]
Western Cape?
Wes-Kaap ondersteun. [Western Cape supports.]
All nine provinces have voted in favour. I therefore declare the report adopted in terms of section 65 of the Constitution.
Report accordingly adopted in accordance with section 65 of the Constitution. Business suspended at 14:55 and resumed at 15:37.
Order! Hon members, we now resume our business. I would also like to further apologise for suspending the House for longer than I said. Hon Minister, we welcome you. We received the apology that you were on the way. Hon members, the secretary will read the tenth Order of the Day.