​VAT CONNECT ISSUE 5 (SEPTEMBER 2015)

Welcome to the latest edition of VAT Connect, the electronic newsletter for vendors that keeps you up to date with the tax matters that affect you.

To read our newsletter below, click on each heading to expand the corresponding article.

Various amendments affecting the VAT Act and the administration thereof were made in terms of the Taxation Act Amendment Act No. 43 of 2014 and the Tax Administration Laws Amendment Act No. 44 of 2014 which were published on 20 January 2015 in GG 38404 and GG 38406 respectively. The amendments came into effect on 20 January 2015 unless otherwise stated:

The most important amendments are listed briefly below:

Electronic services - The VAT Act was amended with effect from 1 June 2014 to provide that certain non-resident suppliers of electronic services must register and account for VAT in South Africa. The different types of electronic services are set out in the Electronic Services Regulations which came into effect on 1 June 2014. This year the law was amended to clarify under which circumstances a supplier of electronic services is required to register and that they supply of such goods cannot be charged with VAT at the zero rate under any circumstances. Refer to the article “Electronic services” for more details.

Relief periods for temporary letting of dwelling by developers – Section 18B was introduced in January 2012 to provide a relief period until 31 December 2014 during which there was a suspension of the liability to declare output tax under section 18(1) for developers that temporarily let dwellings whilst continuing to hold the dwellings as trading stock for sale. The relief period has now been extended until 31 December 2017. Refer to the article “Temporary letting of dwellings” for more details.

Second-hand goods – Two legislative changes were made regarding second-hand goods. Firstly, the definition of “second-hand goods” was amended with effect from 1 April 2015 to exclude gold and goods containing gold. Secondly, section 16(2)(c) was amended to make it clear that a completed form VAT 264  is an integral part of the records referred to in section 20(8) which must be held by a vendor when deducting notional input tax on second-hand goods acquired. Refer to the article “Second-hand goods” for more details.

Imports and exports - The administration of certain rules regarding the import and export of goods from South Africa required some alignment between the VAT Act and the Customs and Excise Act. During 2014 the customs and excise legislative framework was fundamentally restructured by the introduction of the new Customs Control Act, 2014 and the Customs Duty Act, 2014 which are to replace the existing Customs and Excise Act. These new Acts will, however, only come into effect from a future date. Certain new definitions which were introduced and textual amendments which had to be made to the VAT Act, in this regard, will also come into effect on the said future date.

Timing of input tax deduction on importation of goods – Various provisions in the VAT Act were amended with effect from 1 April 2015 to allow a vendor to deduct input tax on imported goods as long as those goods have been released by Customs and provided the relevant documentary proof is held. Refer to the article “Input tax on imported goods” for more details.

Duties and responsibilities of agents – Section 54 was amended with effect from 1 April 2015 to provide that an agent must issue a tax invoice within 21 days of making a supply on behalf of a principal if the agent is required to do so. Furthermore, an agent importing goods on behalf of a principal is, where the agent holds the bill of entry, required to issue a statement to the principal containing certain particulars in regard to importations for a particular period. Refer to the article “Input tax on imported goods” for more details.

Farming inputs – The zero rating under section 11(1)(g) which applies in respect of the purchase of agricultural, pastoral or other goods described in Part A to Schedule 2 for farming purposes will be repealed with effect from a future date. The date will be determined by the Minister of Finance and published by way of a notice in the Government Gazette, but this will not be before 20 January 2016. The exemption in respect of the importation of such goods in Paragraph 7 to Schedule 1 will also be repealed from the same date. In the meantime, and until the Minister determines the applicable date of repeal, the zero rating for certain farming inputs and the associated exemption on importation of those goods will continue to apply.

Elimination of Category F tax period – With effect from 1 July 2015, the four-monthly tax period known as “Category F” for small business is no longer available. Vendors registered under this category were absorbed into the Category B tax period. (bi-monthly).

Bargaining councils – Section 12(ℓ) provides that certain supplies made by bargaining councils to their members are exempt from VAT. The exemption was previously limited to situations where the supplies were covered by membership contributions.

Disclaimer

VAT Connect is an information guide and not a binding general ruling for purposes of the Value-Added Tax Act, 1991 (the VAT Act). For general enquiries regarding VAT call the SARS Contact Centre on 0800 00 7277. Should there be any aspect relating to VAT on which a specific VAT ruling is required, you may apply for a ruling by completing form VAT301 and sending it together with all the necessary information to SARS by facsimile on +27 86 540 9390 or by e-mail to VATRulings@sars.gov.za. Refer also to Quick Reference Guide on VAT Ruling Application Procedure for more details on how to apply for a ruling.
Last Updated: 19/09/2017 3:29 PM     print this page
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