Find the right local SA accountant now!


Article by: Beyerspark Accountant: Jean Claude Marais

Determining "Place of Effective Management"

A consideration for tie-breaker under Article 4 of the OECD Model Tax Convention and commentary.

On the 30th of June 2023, SARS published the 3rd issue of Interpretation Note 6 which deals with the subjective determination of “place of effective management”. This has a major impact on companies operating in more than one country, especially those who offer key management the opportunity to work from different offices across the globe. Although this Interpretation note deals with companies the general principle should be applied to other similar entities.

According to the SARS interpretation, any person other than a natural person is regarded a ‘resident’ if such person is either incorporated in South Africa or has its place of effective management in South Africa.

The amendment made to Article 4 in the OECD Model Tax Convention, provides that ‘place of effective management’ is no longer the only criterion for in the determination of tax residency. This principle does not stem from local tax law, but rather stems from the interpretation of international tax law and regulations. The general principle is that the company’s place of effective management is where the key management is located, and commercial decisions are taken. This is further expanded for companies where those decisions are made in multiple locations, therefore the place of effective management will be the location where those decisions are predominantly or primarily made.

Determining the ‘place of effective management is the onus of the taxpayer and is a subjective determination which require the consideration of multiple factors.

It should be noted that determining the tax residency of a company is only one of the considerations under the tie-breaker rule in a tax treaty.


To contact Jean Claude Marais email:, call: 067 244 9692 or visit