n Comparative and International Law Journal of Southern Africa - Resolving the conflict between 'controlled foreign company' legislation and tax treaties : a South African perspective

Volume 42, Issue 1
  • ISSN : 0010-4051



In order to prevent the avoidance of taxes that result from investing in offshore companies, countries often enact "Controlled Foreign Company" (CFC) legislation which ensures that the undistributed income of a controlled foreign company is not deferred, but it is taxed to its domestic shareholders on a current basis. However, the application of CFC legislation has been questioned on the basis that it contradicts some of the basic principles of double taxation treaties. In this article the salient aspects of tax treaties that are considered to be incompatible with CFC legislation are discussed. The article also analyses how the conflict between the conflict South Africa's South Africa's CFC legislation and its tax treaties can be resolved.

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