The Base Erosion Profit Shifting (BEPS) MLI has been published in Government Gazette 47559 of 25 November 2022. The overall goal of the BEPS MLI is to swiftly update the existing network of bilateral tax treaties to reduce opportunities for tax avoidance and base erosion by multinational enterprises. The BEPS MLI will be applied alongside existing tax treaties. South Africa currently has 79 bilateral tax treaties in force. In addition, a now defunct bilateral tax treaty with the United Kingdom was extended to Granada and Sierra Leone. 76 of these tax treaty countries have been listed by South Africa in the notifications and/or reservations to be covered by the BEPS MLI. These 76 tax treaties will, after all these countries have ratified the BEPS MLI, meet the tax related BEPS measures without the need to renegotiate these existing bilateral tax treaties.
Out of the above-mentioned 81 tax treaties, only five tax treaties will not be covered by the BEPS MLI, namely, Germany, Zambia, Malawi, Grenada and Sierra Leone. South Africa did not include its tax treaties with Germany, Malawi and Zambia in the list of the tax treaties that must be covered by the BEPS MLI because these tax treaties are currently under bilateral renegotiations and BEPS recommendations have been incorporated in the renegotiated agreements. South Africa did not include its tax treaties with Grenada and Sierra Leone as these tax treaties are incompatible with the provisions of BEPS MLI.
The BEPS MLI will come into force for the Republic of South Africa on 1 January 2023. Should require further advice in this regard please do not hesitate to contact us in this regard.