The public was alerted to the publication of the 2024 draft tax bills and the draft Regulations on 31 August 2024 in VAT Connect Issue 18. These bills and draft Regulations have since been promulgated and the following Acts containing amendments to the VAT Act as well as the Regulations were published. These amendment Acts were all promulgated on 24 December 2024 as per Government Gazettes (GGs) 51826, 51827, 51829, and 51828 respectively. The amendments come into effect on 1 April 2025 unless otherwise stated.

These documents can be accessed via the SARS website by clicking on the links below:

• Taxation Laws Amendment Act 42 of 2024
• Tax Administration Laws Amendment Act 43 of 2024
• Revenue Laws Second Amendment Act 44 of 2024
• Rates and Monetary Amounts Amendment Act 45 of 2024
• Amendments to the Regulations on Domestic Reverse Charge Relating to Valuable Metal in terms of Section 74(2) of the Value-Added Tax Act 89 of 1991.
• Regulations on the Method for Determining the VAT liability in respect of Casino Table Games of Chance
• Regulations on Electronic Services for the purpose of the Definition of “electronic services”
• Regulations under section 19(c) of the Carbon Tax Act 15 of 2019

Explanatory Memoranda to the above Acts and Regulations can be accessed by clicking on the links below:

• Explanatory Memorandum on the Taxation Laws Amendment Bill, 2024
• Memorandum on the Objects of the Tax Administration Laws Amendment Bill, 2024
• Memorandum on Objects of Rates and Monetary Amounts and Amendment of Revenue Laws Bill, 2025
• Explanatory Memorandum on Amendments to the Regulations on the Domestic Reverse Charge relating to Valuable Metal issued in terms of Section 74(2) of the Value-Added Tax Act, 1991
• Explanatory Memorandum on Regulations on Determining the VAT Liability in respect of  Casino Table Games of Chance, issued in terms of section 74 of the Value-Added Tax Act, 1991
• Explanatory Memorandum on Amendments to the Regulations Prescribing Electronic Services for the Purpose of the Definition of “Electronic Services” in Section 1(1) of the Value-Added Tax Act, 1991
• Explanatory Memorandum on the Carbon Offset Regulations under the Carbon Tax Act, 2019

A summary of some of the more important VAT amendments is provided below:

• Resident of the Republic – Before the amendment, the definition of “resident of the Republic” referred to the definition of “resident” in section 1(1) of the Income Tax Act, which in turn, in the case of a person other than a natural person, includes a person that has its place of effective management in the Republic. Consequently, supplies by South African companies to its foreign subsidiaries that had their place of effective management in the Republic, were excluded from the zero-rating provisions under section 11(2)(ℓ) despite these foreign subsidiaries being incorporated and having a fixed place of business in a foreign country with no consumption of such services taking place in the Republic. Since the foreign subsidiaries do not conduct any enterprise activities in the Republic, these subsidiaries are unable to register as vendors to unlock the VAT charged. This resulted in a permanent cost for businesses. The amendment to the definition of “resident of the Republic” now excludes a person that is a ”resident” under the Income Tax Act, solely as a result of having its place of effective management in the Republic and that does not carry on any “enterprise” in the Republic.
  
  
• Cross border leases of foreign owned ships, aircraft, rolling stock and parts thereto – On 1 April 2021 the definition of “enterprise” was amended and proviso (xiii) was added to clarify that a non-resident lessor of foreign owned ships, aircraft, and rolling stock are not considered to be conducting an enterprise in the Republic. Effective from 1 April 2023, this proviso was extended to include foreign owned parts relating to such foreign owned ships, aircraft, or rolling stock if those parts are leased under a separate agreement. As a result, foreign lessors that no longer carried on an “enterprise” were required to deregister as vendors. This led to an unintended consequence as these foreign lessors had to account for output tax on the deemed supply of any goods that formed part of the enterprise assets retained upon deregistration, even though these foreign lessors were not entitled to a deduction of input tax on the importation of those goods (see paragraph (cc) of proviso (xiii) to the definition of “enterprise”). To address this issue, proviso (vii) to section 8(2) has been inserted with the intention of releasing foreign lessors from the obligation to account for VAT on enterprise assets retained upon deregistration as a result of the aforementioned amendment, provided the requirements in the said proviso are met.
  
  
• Foreign donor funded projects (FDFPs) – Significant changes to the registration regime for FDFPs took effect on 1 April 2020. These changes required an implementing agency to register a branch separate from the implementing agency’s own registration, for each FDFP managed and administered by that implementing agency. This created a considerable administrative burden for both SARS and the implementing agencies, especially those managing and administering multiple FDFPs. On the basis that international donor funding agreements typically require strict record-keeping, and approval is required for a FDFP from the Minister of Finance, the risk of abuse is mitigated. To ease the administrative burden, section 8(30) now allows for multiple FDFP VAT branches managed and administered by an implementing agency to be merged into a single FDFP VAT branch, provided the implementing agency complies with the additional documentary requirements under the amended section 50(2A). Section 50(2A) also includes special transitional rules for those FDFP projects that were already registered as separate VAT branches of the implementing agency before 1 January 2025. These amendments came into effect on 1 January 2025. For further information on this topic see the updated VAT Reference Guide for Foreign Donor Funded Projects (Issue 3).
  
  
• Mudaraba Sharia Financing Arrangements – Various tax acts were amended to place Islamic finance on equal footing with traditional western finance from a taxation perspective. Given the diversity of Islamic finance, the focus was on the more prevalent Sharia compliant arrangements in South Africa at the time, namely, Mudarabah, Murabaha, and Diminishing Musharaka. However, section 8A that has been inserted with effect from 1 January 2013, initially made special provision only for Murabaha and Diminishing Musharaka. Section 8A(3) now clarifies that the return of profit under a Mudaraba arrangement will also be exempt from VAT. However, this exemption does not extend to any consideration in the form of a fee, commission, or similar charge.
  
  
• Irrecoverable debts subsequently recovered – A vendor is allowed to deduct VAT on taxable supplies on which output tax has been previously accounted for to the extent of any amount subsequently written off as irrecoverable debts under section 22(1). If the vendor later recovers any of these amounts or any portion of those amounts, section 22(2) requires the vendor to repay the previously deducted VAT. Proviso (iv)(aa) to section 22(1) prevents a transferor of an account receivable at face value, on a non-recourse basis, from making a deduction based on the transfer. Whilst the recipient of such account was allowed to make a deduction of the tax amounts written off as irrecoverable, there was no rule for repaying these deductions if the amounts were later recovered. Section 22(2) has now been updated to include this rule.
  
  
• Fuel levy goods and illuminating kerosene – Consequential amendments have been made to sections 11(1)(h) and (ℓ), as well as Schedule 1 due to amendments made to Schedule 1 of the Customs and Excise Act. These amendments are effective from 1 January 2002.
  
  
• Electronic services and intermediaries – Section 54(2B) effective from 1 April 2019, required an intermediary to report and account for VAT on “electronic services” supplied on behalf of a foreign electronic services provider that was not registered for VAT (the principal) in the intermediary’s own VAT return. The foreign electronic services supplier that exceeded the VAT registration threshold, but failed to register, however, remained principally liable to register and account for the VAT in its own return. Section 54(2B) now allows the intermediary and the principal to agree in writing to treat a supply of electronic services by the intermediary on behalf of the principal, as being made by the intermediary. In this instance, both the intermediary and principal will be held jointly and severally liable for performing the relevant duties under the VAT Act and for paying the relevant tax on the taxable supplies made under such agreement. These amendments also apply to principals already registered for VAT (in their own capacity) to reduce the administrative burden on the principal, prevent double accounting of VAT by both the principal and the intermediary on the same supply, and facilitate compliance checks and audits. For more information on electronic services and intermediaries, see the Frequently Asked Questions: Electronic Services.
  
  
• Imported services – Before the amendment to section 14(1), VAT on imported services had to be accounted for and paid within 30 days of the earlier of receipt of the invoice issued by the supplier or the recipient or the time any payment is made by the recipient in respect of that supply. Taxpayers experienced various practical difficulties in adhering to the 30-day rule, resulting in penalties and interest due. To alleviate the burden, the 30-day period under section 14(1) was extended to 60 days with effect from 24 December 2024.
  
  
• Overpayments on imported services or the importation of goods – VAT is payable on “imported services”, and the importation of goods by any vendor within prescribed timelines. However, these VAT amounts may be reduced due to subsequent events such as the granting of a discount, an error in stating the original amount, a reduction in consideration charged, or the cancellation of the supply. Following the introduction of the Tax Administration Act, reductions in the amount of tax chargeable due to subsequent events in respect of the importation of goods by persons who are not registered as vendors (non-vendors), or in respect of imported services without an assessment, were not adequately catered for. This has now been rectified by allowing a vendor to make a deduction of the excess tax under section 16(3)(o) in respect of imported services. In addition, section 44(1) now provides for a refund on application by non-vendors of excess tax paid on imported services or the importation of goods, provided the claim is received within five years from the date the excess tax was paid. These amendments came into effect on 24 December 2024. See Binding General Ruling (BGR) 66 for more details on overpayments on the importation of goods by vendors.
  
  
• Representative vendor and South African bank account – Section 23(2) deemed a person who is not a “resident of the Republic” to not have applied for registration until such person has appointed a representative vendor that is a resident in the Republic and opened a South African bank account. Many foreign entities, despite having no physical presence in the Republic, were required to register as vendors due to the wide definition of “enterprise”. These entities faced difficulties complying with these registration conditions. To provide relief, section 23(2) has now been amended to assist non‐resident vendors with limited or no presence in the Republic, in the circumstances specified in the proviso to section 23(2). These entities (including foreign suppliers of electronic services) must appoint a representative under the newly inserted section 46(2), although such natural person need not be a resident in the Republic. However, under the newly inserted section 23(2B), this relief is withdrawn if the entity no longer meets the requirements of sections 23(2)(b) and 46(1). These amendments are effective from 24 December 2024.