Double Taxation Treaty Interpretation: Lessons from a Case Down Under

Potchefstroom Electronic Law Journal/Potchefstroomse Elektroniese Regsblad

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Field Value
 
Title Double Taxation Treaty Interpretation: Lessons from a Case Down Under
 
Creator du Plessis, Izelle
 
Subject Double taxation treaty
interpretation
taxation
place of effective management
Australia
Baywater
 
Description In the Australian case of Bywater Investments Ltd v Commissioner of Taxation; Hua Wang Bank Berhad v Commissioner of Taxation (the Bywater case) the Australian High Court dealt with the question of whether certain companies were resident in Australia for income tax purposes. The majority answered this question by applying Australian domestic law. In a separate but concurring judgement, Gordon J also discussed the interpretation and application of the relevant double taxation treaty. This contribution analyses Gordon J's judgment to extract guidance from it for the South African courts on their interpretation of double taxation treaties.
It is submitted that South African courts should also follow the "first step" proposed by Gordon J when interpreting double taxation treaties. South African courts may find Gordon J's judgment "instructive" when dealing with the interpretation of the "place of effective management" concept in both domestic law and double taxation treaties. In his judgment Gordon J favours the goal of common interpretation and it is argued that South African courts should follow this example and explicitly support this notion in applicable cases. From Gordon J's judgment and the judgement in Krok v Commissioner, South African Revenue Service, it is deduced that the positions in South Africa and Australia are similar in that the courts in both countries will be bound by the principles of Articles 31 and 32 of the Vienna Convention on the Law of Treaties when interpreting double taxation treaties. Moreover, Gordon J's judgment indicates that the domestic principles of interpretation should not be used in the interpretation of double taxation treaties. Recent South African cases have suggested that there are no differences between the South African domestic principles of interpretation and those contained in Articles 31 and 32 of the Vienna Convention on the Law of Treaties. This contribution submits that there are many similarities between the two, but that the rules are not exactly the same. South African courts should be aware of these differences and rather apply the rules of public international law, including those contained in the Vienna Convention on the Law of Treaties, when they interpret double taxation treaties. Gordon J specifically identifies the category of the Vienna Convention on the Law of Treaties in which he places the Commentary on the OECD Model Tax Convention, to rely on it for his interpretation of the relevant double taxation treaty. South African courts may well learn from this approach, to create more certainty in the process of interpreting a double taxation treaty.
 
Publisher Faculty of Law, North-West University, South Africa
 
Date 2020-12-08
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer reviewed article
 
Format application/pdf
text/plain
application/epub+zip
 
Identifier https://journals.assaf.org.za/index.php/per/article/view/6840
10.17159/1727-3781/2020/v23i0a6840
 
Source Potchefstroom Electronic Law Journal; Vol 23 (2020); 1-22
1727-3781
 
Language eng
 
Relation https://journals.assaf.org.za/index.php/per/article/view/6840/10762
https://journals.assaf.org.za/index.php/per/article/view/6840/10763
https://journals.assaf.org.za/index.php/per/article/view/6840/10774
 
Rights Copyright (c) 2020 Izelle du Plessis
http://creativecommons.org/licenses/by/4.0
 

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