Section 17 (VAT) – Permissible deductions in respect of input tax

Posted on March 27, 2018October 27, 2019 by admin_kmos

17. Permissible deductions in respect of input tax

(1) Where goods or services are acquired or imported by a vendor partly for consumption, use or supply (hereinafter referred to as the intended use) in the course of making taxable supplies and partly for another intended use, the extent to which any tax which has become payable in respect of the supply to the vendor or the importation by the vendor, as the case may be, of such goods or services or in respect of such goods under section 7(3) or any amount determined in accordance with paragraph (b) or (c) of the definition of “input tax” in section 1, is input tax, shall be an amount which bears to the full amount of such tax or amount, as the case may be, the same ratio (as determined by the Commissioner in accordance with a ruling as contemplated in Chapter 7 of the Tax Administration Act or section 41B) as the intended use of such goods or services in the course of making taxable supplies bears to the total intended use of such goods or services: Provided that-

[Words preceding the proviso to subsection (1) substituted by section 271 of Act 28 of 2011 effective on 1 October 2012]

(i) where the intended use of goods or services in the course of making taxable supplies is equal to not less than 95 per cent of the total intended use of such goods or services, the goods or services concerned may for the purposes of this Act be regarded as having been acquired wholly for the purpose of making taxable supplies;

[Paragraph (i) substituted by section 31 of Act 97 of 1993 and section 88 of Act 53 of 1999]

(ii) where goods or services are deemed by section 9(3)(b) to be successively supplied, the extent to which the tax relating to any payment referred to in that section is input tax may be estimated where the calculation cannot be made accurately until the completion of the supply of the goods or services, and in such case such estimate shall be adjusted on completion of the supply, any amount of input tax which has been overestimated being accounted for as output tax in the tax period during which the completion occurs and any amount of input tax which has been underestimated being accounted for as input tax in that period; and

(iii) where a method for determining the ratio referred to in this subsection has been approved by the Commissioner, that method may only be changed with effect from a future tax period, or from such other date as the Commissioner may consider equitable and such other date must fall-

(aa) in the case of a vendor who is a taxpayer as defined in section 1 of the Income Tax Act, within the year of assessment as defined in that Act; or

(bb) in the case of a vendor who is not a taxpayer as defined in section 1 of the Income Tax Act, within the period of twelve months ending on the last day of February, or if such vendor draws up annual financial statements in respect of a year ending other than on the last day of February, within that year,

during which the application for the aforementioned method was made by the vendor.

[Paragraph (iii) added by section 92 of Act 30 of 1998 and substituted by section 84 of Act 8 of 2007 and section 271 of Act 28 of 2011 effective on 1 October 2012]

[Subsection (1) amended by section 22 of Act 136 of 1992, section 92 of Act 30 of 1998 and section 84 of Act 8 of 2007]

(2) Notwithstanding anything in this Act to the contrary, a vendor, shall not be entitled to deduct from the sum of the amounts of output tax and refunds contemplated in section 16(3), any amount of input tax-

(a) in respect of goods or services acquired by such vendor to the extent that such goods or services are acquired for the purposes of entertainment: Provided that this paragraph shall not apply where-

(i) such goods or services are acquired by the vendor for making taxable supplies of entertainment in the ordinary course of an enterprise which-

(aa) continuously or regularly supplies entertainment to clients or customers (other than in the circumstances contemplated in item (bb)) for a consideration to the extent that such taxable supplies of entertainment are made for a charge which-

(A) covers all direct and indirect costs of such entertainment; or

(B) is equal to the open market value of such supply of entertainment,

unless-

(i) such costs or open market value is for bona fide promotion purposes not charged by the vendor in respect of the supply to recipients who are clients or customers in the ordinary course of the enterprise, of entertainment which is in all respects similar to the entertainment continuously or regularly supplied to clients or customers for consideration; or

(ii) the goods or services were acquired by the vendor for purposes of making taxable supplies to such clients or customers of entertainment which consists of the provision of any food and a supply of any portion of such food is subsequently made to any employee of the vendor or to any welfare organization as all such food was not consumed in the course of making such taxable supplies;

[Item (aa) amended by section 84 of Act 20 of 2006]

(bb) supplies entertainment to any employee or office holder of the vendor or any connected person in relation to the vendor, to the extent that such taxable supplies of entertainment are made for a charge which covers all direct and indirect costs of such entertainment;

[Paragraph (i) substituted by section 31 of Act 136 of 1991 and section 33 of Act 27 of 1997]

(ii) such goods or services are acquired by the vendor for the consumption or enjoyment by that vendor (including, where the vendor is a partnership, a member of such partnership), an employee, office holder of such vendor, or a self-employed natural person in respect of a meal, refreshment or accommodation, in respect of any night that such vendor or member is by reason of the vendor’s enterprise or, in the case of such employee, office holder or self-employed natural person, he or she is by reason of the duties of his or her employment, office or contractual relationship, obliged to spend away from his or her usual place of residence and from his or her usual working-place. For the purposes of this section, the term ‘self-employed natural person’ shall mean a person to whom an amount is paid or is payable in the course of any trade carried on by him or her independently of the person by whom such amount is paid or payable and of the person to whom the services have been or are to be rendered, as contemplated in the proviso to paragraph (ii) of the exclusions to the definition of ‘remuneration’ in paragraph 1 of the Fourth Schedule to the Income Tax Act;

[Paragraph (ii) substituted by section 22 of Act 136 of 1992, section 33 of Act 27 of 1997 and section 84 of Act 20 of 2006]

(iii) such goods or services consist of entertainment supplied by the vendor as operator of any conveyance to a passenger or crew member, in such conveyance during a journey, where such entertainment is supplied as part of or in conjunction with the transport service supplied by the vendor, where the supply of such transport service is a taxable supply;

[Subparagraph (iii) substituted by section 173 of Act 45 of 2003, section 102 of Act 32 of 2004 and section 174 of Act 31 of 2013 effective on 1 April 2014]

(iv) such goods or services consist of a meal or refreshment supplied by the vendor as organizer of a seminar or similar event to a participant in such seminar or similar event, the supply of such meal or refreshment is made during the course of or immediately before or after such seminar or similar event and a charge which covers the cost of such meal or refreshment is made by the vendor to the recipient;

[Paragraph (iv) substituted by section 22 of Act 136 of 1992]

(v) such goods or services are acquired by a municipality for the purpose of providing sporting or recreational facilities or public amenities to the public;

[Paragraph (v) substituted by section 31 of Act 97 of 1993 and section 48 of Act 9 of 2006]

(vi) such goods or services are acquired by a welfare organization, for the purpose of making supplies in the furtherance of its aims and objects; or

[Paragraph (vi) added by section 31 of Act 136 of 1991]

(vii) such goods or services are acquired by a vendor for an employee or office holder of such vendor, that are incidental to the admission into a medical care facility;

[Subparagraph (vii) added by section 173 of Act 45 of 2003, substituted by section 102 of Act 32 of 2004 and amended by section 108 of Act 31 of 2005]

(viii) such goods or services consist of a meal or refreshment supplied by the vendor as operator of any ship or vessel (otherwise than in the circumstances contemplated in subparagraph (iii)) in such ship or vessel to a crew member of such ship or vessel, where such meal refreshment is supplied in the course of making a taxable supply by that vendor; or

[Subparagraph (viii) added by section 102 of Act 32 of 2004 and amended by section 108 of Act 31 of 2005]

(ix) that entertainment is acquired by the vendor for the purpose of awarding that entertainment as a prize contemplated in section 16(3)(d) in consequence of a supply contemplated in section 8(13);

[Subparagraph (ix) added by section 108 of Act 31 of 2005]

[Paragraph (a) amended by section 31 of Act 97 of 1993]

(b) in respect of any fees or subscriptions paid by the vendor in respect of membership of any club, association or society of a sporting, social or recreational nature; or

(i) this paragraph shall not apply where that motor car is acquired by the vendor exclusively for the purpose of making a taxable supply of that motor car in the ordinary course of an enterprise which continuously or regularly supplies motor cars, whether that supply is made by way of sale or under an instalment credit agreement or by way of rental agreement at an economic rental consideration;

(ii) for the purposes of this paragraph a motor car acquired by such vendor for demonstration purposes or for temporary use prior to a taxable supply by such vendor shall be deemed to be acquired exclusively for the purpose of making a taxable supply; and

(iii) this paragraph shall not apply where-

(aa) that motor car is acquired by the vendor for the purposes of awarding that motor car as a prize contemplated in section 16(3)(d) in consequence of a supply contemplated in section 8(13); or

(bb) the supply of that motor car is in the ordinary course of an enterprise which continuously or regularly supplies motor cars as prizes to clients or customers (other than to any employee or office holder of the vendor or any connected person in relation to that employee, office holder or vendor) to the extent that it is in consequence of a taxable supply made in the course or furtherance of an enterprise; or

[Paragraph (c) amended by section 108 of Act 31 of 2005]

(d) in respect of any goods or services acquired by a superannuation scheme referred to in section 2, for the purposes of the supply by such scheme of any medical or dental services or services directly connected with such medical or dental services or of any goods necessary for or subordinate or incidental to the supply of any such services.

[Paragraph (d) added by section 22 of Act 136 of 1992 and substituted by section 17 of Act 20 of 1994]

[Subsection (2) amended by section 108 of Act 31 of 2005 and section 84 of Act 8 of 2007]

(2A) Subsection (2) shall not apply to input tax in respect of goods or services that are applied in the course or furtherance of a foreign donor funded project.

[Subsection (2A) inserted by section 84 of Act 20 of 2006 and substituted by section 84 of Act 8 of 2007 and section 31 of Act 36 of 2007]

(3) Notwithstanding anything in section 16 (4), where a vendor has made a supply of goods as contemplated in section 8(10) and in respect of the acquisition thereof by the vendor a deduction of input tax under section 16 (3) was denied in terms of subsection (2) of this section, the vendor shall not be required to account for output tax in relation to such supply.

(4) Where, but for the provisions of this subsection, an amount qualifies or has qualified for a deduction under more than one provision of this Act, a deduction of such amount, or any portion thereof, shall not be made more than once in the calculation of the amount of tax payable by any person.

[Subsection (4) added by section 33 of Act 27 of 1997]

Section 16 (VAT) – Calculation of tax payable

Posted on March 27, 2018January 15, 2024 by admin_kmos

16. Calculation of tax payable

(1) The tax payable by a vendor shall be calculated by him in accordance with the provisions of this section in respect of each tax period during which he has carried on an enterprise in respect of which he is registered or is required to be registered in terms of section 23: Provided that the Commissioner may authorise a vendor to calculate the tax payable in accordance with a method which the Minister may prescribe by regulation.

[Subsection (1) amended by section 91 of Act 30 of 1998]

(2) No deduction of input tax in respect of a supply of goods or services, the importation of any goods into the Republic or any other deduction shall be made in terms of this Act, unless-

[Words preceding paragraph (a) substituted by section 137 of Act 24 of 2011 with effect from 10 January 2012]

(a) a tax invoice or debit note or credit note in relation to that supply has been provided in accordance with section 20 or 21 and is held by the vendor making that deduction at the time that any return in respect of that supply is furnished;

[Paragraph (a) substituted by section 156 of Act 60 of 2001 and amended by section 172 of Act 45 of 2003]

(b)

(i) a document as is acceptable to the Commissioner has been issued in terms of section 20(6); or

(ii) a document issued by the supplier in compliance with section 20(7) or 21(5); or

[Paragraph (b) substituted by section 29 of Act 8 of 2010 effective on 2 November 2010]

(c) records are maintained as required by section 20(8) or 20(8A) where the supply is a supply of second-hand goods or a supply of goods as contemplated in section 8(10) and in either case is a supply to which that section relates; or

[Paragraph (c) substituted by section 26(1)(b) of Act 44 of 2014 and by section 29(1)(a) of Act 20 of 2022 deemed effective on 1 April, 2022]

(d) a bill of entry or other document prescribed in terms of the Customs and Excise Act together with the receipt for the payment of the tax in relation to the said importation have been delivered (including by means of an electronic delivery mechanism) in accordance with that Act and are held by the vendor making that deduction, at the time that any return in respect of that importation is furnished; or

[Paragraph (d) inserted by section 21 of Act 136 of 1992, substituted by section 87 of Act 53 of 1999, amended by section 156 of Act 60 of 2001 and substituted by section 25 of Act 44 of 2014 effective on 1 April 2015]

(dA) a bill of entry or other document prescribed in terms of the Customs and Excise Act as contemplated in section 54(2A) is held by the agent, and a statement as contemplated in section 54(3)(b) is held by the vendor at the time that any return in respect of that importation is furnished; or

[Paragraph (dA) inserted by section 25 of Act 44 of 2014 effective on 1 April 2015]

(e) a tax invoice or debit or credit note has been provided as contemplated in section 54(2), and a statement as contemplated in section 54(3)(a) is held by the vendor at the time a return in respect of the supply to the vendor is furnished;

[Paragraph (e) added by section 156 of Act 60 of 2001, amended by section 172 of Act 45 of 2003, substituted by section 30 of Act 36 of 2007 and amended by section 25 of Act 23 of 2015 effective on 1 April 2016]

(f) the vendor, in the case where an amount is deducted from the sum of the amounts of output tax which are attributable to that period in terms of subsection (3)(c), (d), (dA), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n) or (o), is in possession of documentary proof, as is prescribed by the Commissioner, substantiating the vendor’s entitlement to the deduction at the time a return in respect of the deduction is furnished; or

[Paragraph (f) added by section 30(c) of Act 36 of 2007 and substituted by section 173(1)(a) of Act 31 of 2013, by section 25(1) of Act 23 of 2015, by section 26(1)(a) of Act 16 of 2016 and by section 29(1)(b) of Act 20 of 2022 deemed effective on 1 April, 2022]

(g)

(i) a ruling requested no later than two months prior to the expiry of the five-year period referred to in subsection (3) and issued in terms of section 41B of this Act or Chapter 7 of the Tax Administration Act confirms that the document in the vendor’s possession is acceptable for the purpose of making a deduction; and

(ii) the ruling and document are held by the vendor at the time a return in respect of the deduction is furnished: Provided that the Commissioner may only issue a ruling in terms of this paragraph if satisfied that-

(aa) the vendor has taken reasonable steps to obtain a document required in terms of paragraph (a), (b), (c), (d), (dA), (e) or (f) and is unable to obtain such a document due to circumstances beyond the vendor’s control; and

(bb) no other provision of this Act can be applied to satisfy the Commissioner that the document in the vendor’s possession is acceptable for purposes of making a deduction:

[Paragraph (g) added by section 25 of Act 23 of 2015 and substituted by section 26 of Act 16 of 2016 effective on 19 January 2017, applies in respect of tax periods commencing on or after that date]

Provided that where a tax invoice or debit note or credit note in relation to that supply has been provided in accordance with this Act, or a bill of entry or other document has been delivered (including by means of an electronic delivery mechanism) in accordance with the Customs and Excise Act, as the case may be, the Commissioner may determine that no deduction for input tax in relation to that supply or importation shall be made unless that tax invoice or debit note or credit note or that bill of entry or other document is retained in accordance with the provisions of section 55 and Part A of Chapter 4 of the Tax Administration Act.

[Proviso to subsection (2) substituted by section 271 of Act 28 of 2011 and section 25 of Act 44 of 2014 effective on 1 April 2015]

[Subsection (2) amended by section 21 of Act 136 of 1992, section 91 of Act 30 of 1998, section 107 of Act 31 of 2005, section 83 of Act 20 of 2006 and section 30 of Act 36 of 2007]

(3) Subject to the provisions of subsection (2) of this section and the provisions of sections 15 and 17, the amount of tax payable in respect of a tax period shall be calculated by deducting from the sum of the amounts of output tax of the vendor which are attributable to that period, as determined under subsection (4), and the amounts (if any) received by the vendor during that period by way of refunds of tax charged under section 7(1)(b) and (c) and 7(3)(a), the following amounts, namely-

(a) in the case of a vendor who is in terms of section 15 required to account for tax payable on an invoice basis, the amounts of input tax-

(i) in respect of supplies of goods and services (not being supplies of second-hand goods to which paragraph (b) of the definition of “input tax” in section 1 applies and supplies referred to in subparagraph (iiA)) made to the vendor during that tax period;

[Subparagraph (i) substituted by section 23 of Act 37 of 1996]

(ii)

(aa) subject to the provisions of item (bb), in respect of supplies of second-hand goods to which paragraph (b) of the definition of “input tax” in section 1 applies to the extent that payment of any consideration which has the effect of reducing or discharging any obligation (whether an existing obligation or an obligation which will arise in the future) relating to the purchase price for those supplies has been made during that tax period;

[Item (aa) substituted by section 137 of Act 24 of 2011 with effect from 10 January 2012]

(bb) in respect of supplies of second-hand goods to which paragraph (b) of the definition of “input tax” in section 1 applies which consist of-

(A) fixed property in respect of which the provisions of section 9(3)(d) apply if transfer of that fixed property was effected by registration in a deeds registry and the fixed property was registered in the name of the vendor that makes the deduction during that tax period;

[Subitem (A) substituted by section 137 of Act 24 of 2011 with effect from 10 January 2012]

(B) a share in a share block company which confers a right to or an interest in the use of immovable property if a signed use agreement has been entered into between the company that operates the share block scheme and a member of that company;

[Subitem (B) substituted by section 137 of Act 24 of 2011 with effect from 10 January 2012]

[Words following subitem (B) deleted by section 137 of Act 24 of 2011 with effect from 10 January 2012]

[Subparagraph (ii) substituted by section 30 of Act 97 of 1993 and section 16 of Act 20 of 1994, amended by section 23 of Act 37 of 1996 and substituted by section 32 of Act 27 of 1997]

(iiA) in respect of taxable supplies made to the vendor under sales concluded on or after 6 June 1996 in respect of which the provisions of section 9(3)(d) apply (other than supplies in respect of which the provisions of section 10 (4) apply), to the extent that payment of any consideration which has the effect of reducing or discharging any obligation (whether an existing obligation or an obligation which will arise in the future) relating to the purchase price for those supplies has been made during that tax period;

[Subparagraph (iiA) inserted by section 23 of Act 37 of 1996 and substituted by section 32 of Act 27 of 1997]

(iii) charged in terms of section 7(1)(b) in respect of goods imported into the Republic by the vendor and released in terms of the Customs and Excise Act during that tax period;

[Subparagraph (iii) substituted by section 173 of Act 31 of 2013 and section 98 of Act 43 of 2014 effective on 1 April 2015]

(iv) charged in terms of section 7(3)(a) in respect of goods subject to excise duty or environmental levy as contemplated in that section and paid during that tax period;

[Subparagraph (iv) substituted by section 83 of Act 8 of 2007 and section 173 of Act 31 of 2013 effective on 1 April 2014]

(v) calculated in accordance with section 21(2)(b) or 21 (7) or section 22(1), 22(1A) or 22(4), as applicable to the vendor:

[Subparagraph (v) substituted by section 30 of Act 136 of 1991, section 23 of Act 37 of 1996 and section 32 of Act 27 of 1997]

Provided that this paragraph does not apply where a vendor acquires goods or services that are to be awarded as a prize or winnings and in respect of which that vendor qualifies or will qualify for a deduction in terms of paragraph (d).

[Proviso added by section 107 of Act 31 of 2005]

(b) in the case of a vendor who is in terms of section 15 required to account for tax payable on a payments basis, the amounts of input tax-

(i) in respect of supplies of goods and services made to the vendor in respect of which the provisions of section 9 (1), (3) (a), (b) or (d) or (4) apply, to the extent that payments of any consideration which has the effect of reducing or discharging any obligation (whether an existing obligation or an obligation which will arise in the future) relating to the purchase price for those supplies have been made during that tax period;

[Proviso to subparagraph (i) deleted by section 148 of Act 22 of 2012 effective on 10 January 2012]

shall be deducted only after such transfer duty or stamp duty, as the case may be, has been paid;

[Subparagraph (i) substituted by section 30 of Act 97 of 1993 and by section 16 of Act 20 of 1994 and amended by section 23 of Act 37 of 1996]

(ii) charged in terms of section 7(1)(b) in respect of goods imported into the Republic by the vendor and released in terms of the Customs and Excise Act or in terms of section 7(3)(a) in respect of goods subject to excise duty or environmental levy as contemplated in that section and paid by the vendor during that tax period;

[Subparagraph (ii) substituted by section 83 of Act 8 of 2007 and section 98 of Act 43 of 2014 effective on 1 April 2015]

(iii) in respect of supplies of goods and services made to the vendor during the tax period, excluding supplies of goods and services to which subparagraph (i) of this paragraph applies;

(iv) calculated in accordance with section 21(2)(b) or 21 (7), as applicable to the vendor, to the extent that payments in respect of the tax so calculated have been made during the tax period;

(v) calculated in accordance with section 22(1), as applicable to the vendor:

[Subparagraph (v) substituted by section 30 of Act 136 of 1991]

[Proviso added by section 107 of Act 31 of 2005]

(c) an amount equal to the tax fraction of any payment made during the tax period by the vendor to indemnify another person in terms of any contract of insurance: Provided that this paragraph-

(i) shall only apply where the supply of that contract of insurance is a taxable supply or where the supply of that contract of insurance would have been a taxable supply if the time of performance of that supply had been on or after the commencement date;

(ii) shall not apply where that payment is in respect of the supply of goods or services to the vendor or the importation of any goods by the vendor;

(iii) shall not apply where the supply of that contract of insurance is a supply charged with tax at the rate of zero per cent under section 11 and that other person is, at the time that that payment is made, not a vendor and not a resident of the Republic;

(iv) shall not apply where that payment results from a supply of goods or services to that other person where those goods are situated outside the Republic or those services are physically performed elsewhere than in the Republic at the time of that supply;

[Subparagraph (iv) substituted by section 16 of Act 20 of 1994]

(d) an amount equal to the tax fraction of any amount paid during the tax period by the supplier of the services contemplated in section 8(13) as a prize or winnings to the recipient of such services: Provided that where the prize or winnings awarded constitutes either goods or services, the deduction must be limited to the input tax on the initial cost of acquiring those goods or services;

[Paragraph (d) substituted by section 107 of Act 31 of 2005 and section 83 of Act 20 of 2006]

(dA) an amount equal to the tax fraction of any amount paid by the supplier of the services as contemplated in section 8(13) to the National Lottery Distribution Trust Fund, established by section 21 of the Lotteries Act, 1997 (Act No. 57 of 1997);

[Paragraph (dA) inserted by section 87 of Act 53 of 1999]

(e) an amount equal to the tax fraction of any amount of tax on totalizator transactions or tax on betting levied and paid for the benefit of any Provincial Revenue Fund by the supplier of the services contemplated in section 8 (13);

(f) the amounts calculated in accordance with section 18(4) or (5) in relation to any goods or services applied during the tax period as contemplated in that section;

(g) any amount of input tax in relation to any supply in respect of which subsection (2) of this section has operated to deny a deduction and the vendor has obtained, during the tax period, the prescribed documents or records in relation to that supply;

[Paragraph (g) substituted by section 30 of Act 36 of 2007]

(h) in the case of a vendor who has supplied goods or services during that tax period otherwise than in terms of section 18(2), an amount determined in accordance with the formula-

A × B × C

in which formula-

“A” represents the tax fraction;

“B” represents the lesser of-

(i)

[Item. (aa) substituted by section 30 of Act 97 of 1993 and section 172 of Act 45 of 2003]

(bb) where the vendor was at some time after the acquisition of such goods or services deemed under section 18(4) to have been supplied with such goods or services, the amount which was represented by “B” in the formula contemplated in section 18(4) when such goods or services were deemed to be supplied to the vendor; or

(cc) where the vendor was at some time after the acquisition of such goods or services required to make an adjustment contemplated in section 18 (2) or (5), the amounts then represented by “A” in the formula contemplated in section 10(9) or “B” in the formula contemplated in section 18 (5) respectively, in the most recent adjustment made in terms of section 18(2) or (5) by the vendor prior to such supply of goods or services; and

(ii) the open market value of the supply of those goods or services at the time those goods or services are deemed to be supplied; and

“C” represents the percentage that, immediately before the time of the supply, the use or application of the goods or services for the purpose other than that of making taxable supplies was of the total use or application of the goods or services:

[Definition of “C” amended by section 21 of Act 136 of 1992]

Provided that-

(i) ……….

[Paragraph (i) of the proviso deleted by section 148 of Act 22 of 2012 effective on 10 January 2012]

(ii) this subsection does not apply where-

(aa) such goods or services were acquired before 1 April 2005, or an input tax deduction in respect of that acquisition was denied under proviso (iv) to section 18(4); and

(bb) the vendor is a public authority which registered prior to 1 April 2005, notwithstanding paragraph (b)(i) of ‘enterprise’ in section 1 or a public entity listed in Part A or C of Schedule 3 to the Public Finance Management Act, 1999 (Act No. 1 of 1999); or

[Subparagraph (ii) amended by section 47 of Act 9 of 2006]

(iii) this subsection does not apply where such goods or services were acquired by a municipality before 1 July 2006, or an input tax deduction in respect of that acquisition was denied in terms of paragraph (v) of the proviso to section 18(4);

[Subparagraph (iii) added by section 47 of Act 9 of 2006]

[Proviso substituted by section 107 of Act 31 of 2005]

[Paragraph (h) amended by section 16 of Act 20 of 1994 and section 91 of Act 30 of 1998]

(i) an amount equal to the tax fraction of any payment made by the vendor during the tax period in respect of the redemption with him, or his agent, of the monetary value of any token, voucher or stamp contemplated in section 10(20), to a supplier of goods or services who has granted a discount on the surrender to him of such token, voucher or stamp by a recipient of a supply of goods or services if those goods or services are not charged with tax at the rate of zero per cent under section 11;

[Paragraph (i) inserted by section 16 of Act 20 of 1994 and substituted by section 137 of Act 24 of 2011 with effect from 10 January 2012]

(j)

(i) in the case of a vendor who has, during the tax period, supplied a property in possession in the course or furtherance of his enterprise under a sale, an amount equal to the tax fraction of the lesser of-

(aa) the amount (excluding any amount of tax) received in respect of the sale of such property in possession less any amount paid by the vendor in respect of the acquisition of such property in possession; and

(bb) the amount of the unrecovered loan balance less any amount paid by the vendor in respect of the acquisition of such property in possession:

Provided that no deduction shall be made in terms of this paragraph where the person in default is or will be held liable for payment of such lesser amount;

(ii) for the purposes of this paragraph-

(aa) “property in possession” means fixed property acquired by any vendor-

(A) at a sale in execution as a result of default by any person (other than a person who held or applied such fixed property for the purpose of making taxable supplies in the course or furtherance of his enterprise immediately before such sale in execution) in respect of an unrecovered loan balance due to that vendor in terms of a credit agreement; or

(B) as a result of an abandonment authorised by the Master of the High Court where such person has defaulted in respect of an unrecovered loan balance due to that vendor in terms of a credit agreement or gone insolvent;

(bb) “unrecovered loan balance” means the amount of capital, interest and administrative holding costs outstanding in terms of a credit agreement at the date of sale in execution or the date of authorisation of abandonment by the Master of the High Court;

[Paragraph (j) inserted by section 32 of Act 27 of 1997]

(k) an amount of input tax as determined by the Commissioner paid by a vendor to a supplier of pastoral, agricultural or other farming products who is not a vendor, in terms of a scheme operated by the controlling body of an industry for the development of small-scale farmers approved by the Minister with the concurrence of the Cabinet member responsible for agriculture to compensate that supplier for tax incurred in the production of such goods:

[Paragraph (k) added by section 71 of Act 19 of 2001 and substituted by section 83 of Act 17 of 2017 effective on 18 December 2017]

(l) an amount as determined by the Commissioner in lieu of a refund in respect of the purchase and use of diesel paid by a vendor to a supplier of pastoral, agricultural or other farming products who is not a vendor, in terms of a scheme operated by the controlling body of an industry for the development of small- scale farmers approved by the Minister with the concurrence of the Cabinet member responsible for agriculture to compensate that supplier for an amount refundable in the production of such goods;

[Paragraph (l) added by section 156 of Act 60 of 2001 and substituted by section 173 of Act 31 of 2013 effective on 1 April 2014]

(m) an amount equal to the tax fraction initially applied to any excess amount contemplated in section 8(27) which is refunded by the vendor during the tax period:

(n) an amount equal to the tax fraction of the lesser of the amount contemplated in section 10(25) or the open market value of the movable goods on the date-

(i) those goods are returned to the customs controlled area enterprise or SEZ operator; or

[Subparagraph (i) substituted by section 26 of Act 16 of 2016 effective on the date on which the Special Economic Zones Act, 2014 (Act No. 16 of 2014), came into operation, 9 February 2016]

(ii) those goods are supplied by the customs controlled area enterprise or SEZ operator where those goods are supplied after the relevant prescribed time period contemplated in section 8(24);

[Subparagraph (ii) substituted by section 26(1)(c) of Act 16 of 2016 and amended by section 53(1) of Act 20 of 2021 effective on 1 April, 2022]

[Paragraph (n) inserted by section 111 of Act 60 of 2008]

(o) an amount equal to the tax fraction of the amount determined in accordance with the provisions of section 10(29):

[Paragraph (o) inserted by section 53(1) of Act 20 of 2021 and substituted by section 29(1)(c) of Act 20 of 2022 deemed effective on 1 April, 2022]

Provided that –

(i) where any vendor is entitled under the preceding provisions of this subsection to deduct any amount in respect of any tax period from the said sum, the vendor may deduct that amount from the amount of output tax attributable to a later tax period which ends no later than five years after the end of the tax period during which –

(aa) the tax invoice for that supply should have been issued as contemplated in section 20(1);

(bb) goods were entered for home consumption in terms of the Customs and Excise Act;

(cc) second-hand goods were acquired or goods as contemplated in section 8(10) were repossessed or surrendered;

[Subparagraph (cc) substituted by section 173 of Act 31 of 2013 effective on 1 April 2014]

(dd) the agent should have notified the principal as contemplated in section 54(3); or

(ee) in any other case, the vendor for the first time became entitled to such deduction, notwithstanding the documentary proof that the vendor must be in possession of in terms of subsection (2) of this section; and

(ii) the said period of five years contemplated in proviso (i) of this section shall be limited to six months prior to the tax period in which the deduction is made, where the Commissioner is satisfied that the deduction was not permissible in accordance with the practice generally prevailing,

and to the extent that it has not previously been deducted by the vendor under this subsection:

[First proviso substituted by section 106 of Act 35 of 2007]

Provided further that the amount of input tax which, in relation to any supply of goods or services to a vendor, the vendor may deduct in respect of any payment referred to in paragraph (a) (ii) or (b) (i) of this subsection, shall be an amount which bears to the full amount of the input tax relating to that supply the same ratio as the amount of the payment bears to the full value on which tax was payable in respect of the supply.

[Subsection (3) amended by section 71 of Act 19 of 2001, section 107 of Act 31 of 2005 and section 83 of Act 20 of 2006]

(4) For the purposes of subsection (3), output tax in relation to a supply made by a vendor shall be attributable to a tax period-

(a) in the case of a vendor who is in terms of section 15 required to account for tax payable on an invoice basis-

(i) subject to the provisions of subparagraph (ii), where a supply is made or is deemed to be made by him during that tax period;

(ii) where a supply is made under a sale concluded on or after 6 June 1996 in respect of which the provisions of section 9(3)(d) apply (other than a supply in respect of which the provisions of section 10(4) apply), to the extent that payment of any consideration which has the effect of reducing or discharging any obligation (whether an existing obligation or an obligation which will arise in the future) relating to the purchase price for that supply has been made during that tax period; or

[Subparagraph (ii) substituted by section 32 of Act 27 of 1997]

[Paragraph (a) substituted by section 23 of Act 37 of 1996]

(b) in the case of a vendor who is in terms of section 15 required to account for tax payable on a payments basis-

(i) to the extent that payment of any consideration which has the effect of reducing or discharging any obligation (whether an existing obligation or an obligation which will arise in the future) relating to the purchase price has been received by the vendor during that tax period for any supply of goods or services in respect of which the provisions of section 9(1), (3) (a), (b) or (d) or (4) or 21 (2) (a) or (6) apply (other than a supply in respect of which the provisions of section 10(4) apply);

[Subparagraph (i) substituted by section 30 of Act 97 of 1993, section 16 of Act 20 of 1994, section 23 of Act 37 of 1996 and section 87 of Act 53 of 1999]

(ii) where a supply of goods or services is made or deemed to be made during the tax period by that vendor, not being a supply of goods or services to which subparagraph (i) of this paragraph applies.

(5) If, in relation to any tax period of any vendor, the aggregate of the amounts that may be deducted under subsection (3) from the sum referred to in that subsection, the amount (if any) refundable to the vendor under section 15(8), and any other amount refundable under Chapter 13 of the Tax Administration Act, exceeds the said sum, the amount of the excess shall, subject to the provisions of this Act, be refundable to the vendor by the Commissioner as provided in Chapter 13 of the Tax Administration Act.

[Subsection (5) substituted by section 271 of Act 28 of 2011 effective on 1 October 2012 except to the extent related to interest under section 39 in respect of which the wording prior to the amendment applies]

Section 15 (VAT) – Accounting basis

Posted on March 27, 2018January 25, 2023 by admin_kmos

15. Accounting basis

(1) Except as hereinafter provided, every vendor shall account for tax payable on an invoice basis for the purposes of section 16.

(2) Subject to the provisions of subsections (2A) and (3), the Commissioner may, on application in writing by a vendor, direct that the vendor account for the tax payable on a payments basis for the purposes of section 16 with effect from the vendor’s registration in terms of this Act or, where he has accounted for tax payable on an invoice basis prior to making an application under this subsection, from the commencement of the tax period immediately following the tax period during which that direction is made by the Commissioner (hereinafter referred to as the changeover period), if-

(a) the vendor is-

(i) a public authority;

(ii) any water board or any other institution which has powers similar to those of any such board listed in Part B of Schedule 3 of the Public Finance Management Act, 1999 (Act No. 1 of 1999), which would have complied with the definition of ‘local authority’ in section 1 prior to the deletion of that definition by section 40(1)(i) of the Small Business Amnesty and Taxation Laws Act, 2006 (Act No. 9 of 2006);

(iii) ……….

[Subparagraph (iii) deleted by section 134 of Act 25 of 2015 effective on 1 April 2016]

(iv) a “municipal entity” as defined in section 1 of the Local Government: Municipal Systems Act, 2000 (Act 32 of 2000), where that municipal entity supplies—

(aa) electricity, gas or water; or

(bb) the services consisting of the drainage, removal or disposal of sewage or garbage;

(v) a municipality;

[Subparagraph (v) amended by section 172 of Act 31 of 2013 effective on 1 April 2014]

(vi) an association not for gain;

[Paragraph (a) substituted by section 46 of Act 9 of 2006, section 37 of Act 21 of 2006 and section 13 of Act 9 of 2007 and amended by section 134 of Act 25 of 2015 effective on 1 April 2016]

(vii) carrying on an enterprise as contemplated in paragraph (b)(vi) and (vii) of the definition of “enterprise” in section 1(1); or

[Subparagraph (vii) added by section 172(1)(b) of Act 31 of 2013 and substituted by section 65(1) of Act 23 of 2020 effective on 1 April, 2021]

(viii) the South African Broadcasting Corporation Limited contemplated in section 8A of the Broadcasting Act, 1999 (Act No. 4 of 1999); or

[Subparagraph (vii) added by section 134 of Act 25 of 2015 effective on 1 April 2016]

(b) the vendor is a natural person (other than the trustee of a trust fund) or an unincorporated body of persons of which all the members are natural persons, and-

(i) the total value of the vendor’s taxable supplies in the period of 12 months ending at the end of any tax period has not exceeded R2,5 million; or

[Subparagraph (i) substituted by section 20 of Act 136 of 1992]

(ii) the total value of the vendor’s taxable supplies in the period of 12 months beginning on the first day of any month is not likely to exceed the amount specified in subparagraph (i):

[Paragraph (b) amended by section 90 of Act 30 of 1998]

Provided that the provisions of this Act relating to the determination of the value of any supply of goods or services, whether such supply is made before or on or after the commencement date, shall apply for the purposes of this subsection, but no regard shall be had to any tax charged in respect of such supply.

[Subsection (2) amended by section 31 of Act 27 of 1997]

(2A) Any vendor, other than-

(i) a public authority;

(ii) a municipal entity as defined in section 1 of the Local Government: Municipal Systems Act, 2000 (Act No. 32 of 2000), where that municipal entity supplies-

(aa) electricity, gas or water; or

(bb) the services consisting of the drainage, removal or disposal of sewage or garbage; or

(iii) a municipality,

that in terms of subsection (2) accounts for tax payable on a payments basis shall, in respect of any supply of goods (other than fixed property) or services in respect of which the consideration in money is R100 000 or more, account for the tax payable on an invoice basis.

[Subsection (2A) inserted by section 31 of Act 27 of 1997 and substituted by section 46 of Act 9 of 2006 and section 85 of Act 15 of 2016 effective on 1 April 2017]

(2B) Any vendor registered in terms of section 23(3)(b)(ii) shall account for tax payable on a payment basis for the purposes of section 16 with effect from the date of the vendor’s registration: Provided that the vendor, subject to subsection (2)(b), must account for tax payable on an invoice basis from the commencement of the tax period immediately following the tax period when the total value of taxable supplies of that enterprise has exceeded R50 000.

[Subsection (2B) inserted by section 172 of Act 31 of 2013 effective on 1 April 2014]

(3) Where the Commissioner has under subsection (2) directed that a vendor account for tax payable on a payments basis, and-

(a) the vendor has ceased to satisfy the conditions of subsection (2) under which any such direction may be given, and-

(i) the vendor notifies the Commissioner thereof as required by section 25(c); or

(ii) the Commissioner is otherwise satisfied thereof; or

(b) the vendor has made an application in writing to the Commissioner to account for tax payable on an invoice basis,

the Commissioner shall direct that the vendor account for the tax payable on an invoice basis with effect from the commencement of a future tax period or, where the vendor has failed to notify the Commissioner that he has ceased to satisfy the conditions of subsection (2), as required by the said section 25(c), any tax period directed by the Commissioner: Provided that for the purposes of paragraph (a) any such vendor shall not cease to satisfy the requirements of subsection (2) where the total value of the vendor’s taxable supplies has exceeded or, as the case may be, will exceed the amount specified for the purposes of subsection (2) (b) solely as a consequence of-

(aa) any cessation of or any substantial and permanent reduction in the size or scale of any enterprise carried on by the vendor; or

(bb) the replacement of any plant or other capital asset used in any enterprise carried on by the vendor; or

(cc) abnormal circumstances of a temporary nature.

[Subsection (3) amended by section 31 of Act 27 of 1997]

(4) Where a vendor changes from an invoice basis to a payments basis or from a payments basis to an invoice basis he shall furnish to the Commissioner particulars in the prescribed form calculating the tax payable or refundable in respect of the change in the basis of accounting.

(5) Any vendor to whom subsection (4) applies shall, within the time allowed under this Act for the payment of tax in respect of the tax period immediately preceding the changeover period, pay to the Commissioner the tax payable as calculated in accordance with this section: Provided that where a vendor changes from a payments basis to an invoice basis for the sole reason that such vendor is not a natural person (other than a trustee of a trust fund) or an unincorporated body of persons of which all the members are natural persons, the vendor shall pay to the Commissioner the tax payable as calculated in accordance with this section in equal instalments within the period allowed under this Act for the payment of tax in respect of so many tax periods as the Commissioner may allow, the last of which shall not end on a date later than 10 March 1999.

[Subsection (5) substituted by section 31 of Act 27 of 1997 and amended by section 90 of Act 30 of 1998]

(6) Where a vendor changes from an invoice basis to a payments basis, the tax payable shall, for the purposes of subsection (5), be-

(a) an amount equal to the aggregate of the input tax deducted under section 16(3) in relation to the tax periods up to and including the tax period immediately preceding the changeover period, to the extent that that amount exceeds the aggregate amount of input tax that would have been deducted if the vendor had, for those tax periods, been accounting for tax payable on a payments basis,

reduced by-

(b) an amount equal to the aggregate of the output tax accounted for under section 16(3) in relation to the tax period up to and including the tax period immediately preceding the changeover period, to the extent that that amount exceeds the aggregate amount of output tax that would have been accounted for if the vendor had, for those tax periods, been accounting for tax payable on a payments basis.

(7) Where a vendor changes from a payments basis to an invoice basis, the tax payable shall, for the purposes of subsection (5), be-

(a) an amount equal to the aggregate amount of output tax that would have been accounted for under section 16(3) if the vendor had, in relation to the tax periods up to and including the tax period immediately preceding the changeover period, been accounting for tax payable on an invoice basis, to the extent that that amount exceeds the aggregate of the output tax accounted for in those tax periods,

reduced by-

(b) an amount equal to the aggregate amount of input tax that would have been deducted under section 16(3) if the vendor had, in relation to the tax periods up to and including the tax period immediately preceding the changeover period, been accounting for tax payable on an invoice basis, to the extent that that amount of input tax exceeds the aggregate amount of input tax deducted in those tax periods.

(8) If, in relation to any particulars required to be furnished under subsection (4)-

(a) the amount referred to in subsection (6)(b) exceeds the amount referred to in subsection (6)(a); or

(b) the amount referred to in subsection (7)(b) exceeds the amount referred to in subsection (7)(a),

the amount of the excess shall be refundable to the vendor by the Commissioner in respect of the changeover period as provided in Chapter 13 of the Tax Administration Act, read with section 16(5).

[Subsection (8) substituted by section 271 of Act 28 of 2011 effective on 1 October 2012]

(9) Where a vendor’s basis of accounting is changed as contemplated in subsection (2) or (3), the vendor shall prepare lists of debtors and creditors in relation to the vendor’s enterprise showing the amounts owing by such debtors and the amounts owing to such creditors as at the end of the tax period immediately preceding the changeover period.

Section 14 (VAT) – Collection of value-added tax on imported services, determination of value thereof and exemptions from tax

Posted on March 27, 2018February 12, 2022 by admin_kmos

14. Collection of value-added tax on imported services, determination of value thereof and exemptions from tax

(1) Where tax is payable in terms of section 7(1)(c) in respect of the supply of imported services the recipient shall within 30 days of the date referred to in subsection (2)-

(a) obtain, complete and retain the form prescribed by the Commissioner; and

[Paragraph (a) substituted by section 271 read with paragraph 113 of Schedule 1 of Act 28 of 2011 and by section 19 of Act 24 of 2020]

(b) calculate the tax payable on the value of the imported services at the rate of tax in force on the date of supply of the imported services and pay such tax to the Commissioner:

Provided that where the recipient is a vendor, that vendor must calculate the tax payable on the value of the imported services at the rate of tax in force on the date of supply of the imported services and must furnish the Commissioner with a return reflecting the information required for the purposes of the calculation of the tax in terms of section 14 and pay such tax to the Commissioner in accordance with section 28.

[Subsection (1) substituted by section 28 of Act 8 of 2010 effective on 1 February 2011]

(2) For the purposes of this Act, a supply of imported services shall be deemed to take place at the time an invoice is issued by the supplier or recipient in respect of that supply or the time any payment is made by the recipient in respect of that supply, whichever time is the earlier.

(3) For the purposes of this Act, the value to be placed on the supply of imported services shall, save as otherwise provided in this section, be the value of the consideration for the supply, as determined in terms of section 10(3) or the open market value of the supply, whichever is the greater.

(4) Where a person carries on activities outside the Republic which do not form part of the activities of any enterprise carried on by him and in the course of such first-mentioned activities services are rendered for the purposes of such enterprise which, if rendered by anybody other than the said person, would be imported services, such services shall for the purposes of section 7(1)(c) be deemed to be imported services supplied and received by that person in respect of such enterprise.

(5) The tax chargeable in terms of section 7(1)(c) shall not be payable in respect of-

(a) a supply which is chargeable with tax in terms of section 7(1)(a) at the rate provided in section 7;

(b) a supply which, if made in the Republic, would be charged with tax at the rate of zero per cent applicable in terms of section 11 or would be exempt from tax in terms of section 12;

(c) a supply of an educational service by an educational institution established in an export country which is regulated by an educational authority in that export country; or

[Paragraph (c) added by section 171 of Act 45 of 2003]

(d) a supply by a person of services as contemplated in terms of proviso (iii)(aa) to the definition of ‘enterprise’ in section 1.

[Paragraph (d) added by section 101 of Act 32 of 2004]

(e) a supply of services of which the value in respect of that supply does not exceed R100 per invoice.

[Paragraph (e) added by section 136 of Act 24 of 2011 with effect from 10 January 2012]

Section 13 (VAT) – Collection of tax on importation of goods, determination of value thereof and exemptions from tax

Posted on March 27, 2018January 15, 2024 by admin_kmos

13. Collection of tax on importation of goods, determination of value thereof and exemptions from tax

(1) For the purposes of this Act goods shall be deemed to be imported into the Republic on the date on which the goods are in terms of the provisions of the Customs and Excise Act deemed to be imported: Provided that-

(i) goods which are entered for home consumption in terms of the Customs and Excise Act, shall be deemed to have been imported on the date on which they are so entered;

(ii) ………..

[Subparagraph (ii) substituted by section 170 of Act 45 of 2003, section 100 of Act 32 of 2004 and section 106 of Act 31 of 2005 and deleted by section 110 of Act 60 of 2008]

(iii) goods imported from or via Botswana, eSwatini, Lesotho or Namibia shall be declared and tax paid on entry into the Republic as prescribed by the Commissioner in Chapter XIIA of the Rules under the Customs and Excise Act.

[Subsection (1) substituted by section 30(a) of Act 27 of 1997 and amended by section 100(1)(a) of Act 32 of 2004 effective on the date of promulgation of that Act, 24 January, 2005. Paragraph (iii) substituted by section 86(1)(a) of Act 53 of 1999 and by section 23(a) of Act 16 of 2022]

(2) For the purposes of this Act the value to be placed on the importation of goods into the Republic shall be deemed to be-

(a) where such goods are entered or are required to be entered for home consumption in terms of the Customs and Excise Act, the value thereof for customs duty purposes, plus any duty levied in terms of the said Act in respect of the importation of such goods, plus 10 per cent of the said value; or

(b) where such goods have their origin in Botswana, eSwatini, Lesotho or Namibia and are imported from such a country, the amount of the value as contemplated in paragraph (a), except that such value shall not be increased by the factor of 10 per cent:

[Paragraph (b) substituted by section 86(1)(b) of Act 53 of 1999 and by section 23(b) of Act 16 of 2022]

Provided that where the Minister has made a regulation determining the value of such goods for the purposes of this section, the greater of such determined value or the value declared on importation shall be used instead of the value for customs purposes.

[Subsection (2) amended by section 30 of Act 27 of 1997]

(2A) ……….

[Subsection (2A) inserted by section 135 of Act 24 of 2011, substituted by section 24 of Act 44 of 2014 effective on the date on which the Customs Control Act, 2014 takes effect, substitution by section 24 of Act 44 of 2014 repealed by section 79 of Act 13 of 2017 effective on 20 January 2015) and deleted by section 82 of Act 17 of 2017 effective on 10 January 2012]

(2B) Notwithstanding subsection (2), the value to be placed on the importation of goods into the Republic where-

(a) Note 1A of Item No. 412.07 of Schedule 1 to this Act is applicable; or

(b) Note 5(a)(ii)(aa) of Item No. 470.03 of 00.00 of 02.00 of Schedule 1 to this Act is applicable,

shall be the value determined under section 10(3).

[Subsection (2B) inserted by section 135 of Act 24 of 2011 with effect from 10 January 2012 and substituted by section 171 of Act 31 of 2013 effective on 1 January 2014 – date of operation in section 171 of Act 31 of 2013 as substituted by section 132 of Act 43 of 2014]

(3) The importation of the goods set forth in Schedule 1 to this Act is exempt from the tax imposed in terms of section 7(1)(b).

[Subsection (3) amended by section 15 of Act 20 of 1994 and substituted by section 155 of Act 60 of 2001]

(4) ……….

[Subsection (4) amended by section 19 of Act 136 of 1992 and section 30 of Act 27 of 1997, substituted by section 155 of Act 60 of 2001 and deleted by section 100 of Act 32 of 2004]

(5) The Commissioner may make such arrangements as the Commissioner may deem necessary-

(a) for the collection (in such manner as the Commissioner may determine) by a SARS official, or the Managing Director of the South African Post Office Limited on behalf of the Commissioner, of the tax payable in terms of this Act in respect of the importation of any goods into the Republic; and

[Paragraph (a) substituted by section 70 of Act 19 of 2001, amended by section 155 of Act 60 of 2001 and substituted by section 271 of Act 28 of 2011 effective on 1 October 2012]

(b) for the exchange of such information as is necessary for the carrying out of such arrangements.

[Subsection (5) amended by section 34 of Act 34 of 1997, section 86 of Act 53 of 1999 and section 70 of Act 19 of 2001]

(6) Subject to this Act, the provisions of the Customs and Excise Act relating to the importation, transit, coastwise carriage and clearance of goods and the payment and recovery of duty shall mutatis mutandis apply as if enacted in this Act, whether or not the said provisions apply for the purposes of any duty levied in terms of the Customs and Excise Act.

[Subsection (6) substituted by section 29 of Act 136 of 1991, section 30 of Act 27 of 1997 and section 106 of Act 31 of 2005]

Section 12 (VAT) – Exempt supplies

Posted on March 27, 2018February 12, 2022 by admin_kmos

12. Exempt supplies

The supply of any of the following goods or services shall be exempt from the tax imposed under section 7(1)(a):

(a) The supply of any financial services, but excluding the supply of financial services which, but for this paragraph, would be charged with tax at the rate of zero per cent under section 11;

[Paragraph (a) substituted by section 18 of Act 136 of 1992, section 14 of Act 20 of 1994 and section 22 of Act 37 of 1996]

(b) the supply by any association not for gain of any donated goods or services or any other goods made or manufactured by such association if at least 80 per cent of the value of the materials used in making or manufacturing such other goods consists of donated goods;

(i) a dwelling under an agreement for the letting and hiring thereof, and any ‘right of occupation’ as defined in section 1 of the Housing Development Schemes for Retired Persons Act, 1988 (Act No. 65 of 1988);

[Subparagraph (i) substituted by section 99 of Act 32 of 2004]

(ii) lodging or board and lodging-

(aa) by the employer of the recipient (including an employer as defined in paragraph 1 of the Fourth Schedule to the Income Tax Act), where the recipient is entitled to occupy the accommodation as a benefit of his or her office or employment and his or her right thereto is limited to the period of his or her employment or the term of his or her office or a period agreed upon by the supplier and the recipient;

(bb) by the employer of the recipient, where the employer operates a hostel or boarding establishment mainly for the benefit of the employees otherwise than for the purpose of making profit; or

(cc) ……….

[Item (cc) deleted by section 45 of Act 9 of 2006]

[Paragraph (c) amended by section 69 of Act 19 of 2001 and substituted by section 154 of Act 60 of 2001 and section 117 of Act 74 of 2002]

(d) the supply of leasehold land by way of letting (not being a grant or sale of the lease of that land) to the extent that that land is used or is to be used for the principal purpose of accommodation in a dwelling erected or to be erected on that land;

(e) the supply of land (together with any improvements to such land existing on the date on which the supplier became contractually obliged to supply such land and such existing improvements to the recipient) where such land is situated outside the Republic and such supply is made by way of sale or by way of letting;

(f) the supply of any services to any of its members in the course of the management of-

(i) a body corporate as defined in section 1 of the Sectional Titles Act, 1986 (Act No. 95 of 1986);

[Subparagraph (i) amended by section 170 of Act 31 of 2013 effective on 1 April 2014]

(ii) a share block company;

[Subparagraph (ii) amended by section 18 of Act 136 of 1992 and section 170 of Act 31 of 2013 effective on 1 April 2014]

(iii) any housing development scheme as defined in the Housing Development Schemes for Retired Persons Act, 1988 (Act No. 65 of 1988); or

[Subparagraph (iii) substituted by section 18 of Act 136 of 1992 and amended by section 170 of Act 31 of 2013 effective on 1 April 2014]

(iv) any association of persons (other than a company registered or deemed to be registered under the Companies Act, 2008 (Act No. 71 of 2008), any co-operative, close corporation or trust, but including a non-profit company as defined in section 1 of the Companies Act, 2008 (Act No. 71 of 2008)) where the Commissioner is satisfied that, subject to such conditions as he or she may deem necessary, such association of persons-

(A) has been formed solely for purposes of managing the collective interests of residential property use or ownership of all its members, which includes expenditure applicable to the common immovable property of such members and the collection of levies for which such members are liable; and

(B) is not permitted to distribute any of its funds to any person other than a similar association of persons,

[Subparagraph (iv) added by section 170 of Act 31 of 2013 effective on 1 April 2014]

where the cost of supplying such services is met out of contributions levied by such body corporate, share block company or under such housing development scheme or association, as the case may be: Provided that this paragraph shall not apply or shall apply to a limited extent where such body corporate, share block company, scheme or association applies in writing to the Commissioner, and the Commissioner, having regard to the circumstances of the case, directs with effect from a future date that the provisions of this paragraph shall not apply to that body corporate, share block company, scheme or association or that the provisions of this paragraph shall apply only to a limited extent specified by him: Provided further that this paragraph shall not apply to the services supplied by any body corporate, share block company, scheme or association which manages a property time-sharing scheme as defined in section 1 of the Property Time-sharing Control Act, 1983 (Act No. 75 of1983);

[Words following subparagraph (iv) substituted by section 170 of Act 31 of 2013 effective on 1 April 2014]

[Paragraph (f) amended by section 28 of Act 97 of 1993]

(g) the supply by any person in the course of a transport business of any service comprising the transport by that person in a vehicle (other than a game viewing vehicle contemplated in paragraph (e) of the definition of ‘motor car’ in section 1) operated by him of fare-paying passengers and their personal effects by road or railway (excluding a funicular railway), not being a supply of any such service which, but for this paragraph, would be charged with tax at the rate of zero per cent under section 11(2)(a);

[Paragraph (g) substituted by section 28 of Act 136 of 1991, section 29 of Act 27 of 1997 and section 99 of Act 32 of 2004]

(h)

(i) the supply of educational services-

(aa) provided by the State or a school registered under the South African Schools Act, 1996 (Act No. 84 of 1996), or a public college or private college established, declared or registered as such under the Further Education and Training Colleges Act, 2006 (Act No. 16 of 2006).

[Item (aa) substituted by section 109 of Act 60 of 2008]

(bb) by an institution that provides higher education on a full time, part-time or distance basis and which is established or deemed to be established as a public higher education institution under the Higher Education Act, 1997 (Act No. 101 of 1997), or is declared as a public higher education institution under that Act, or is registered or conditionally registered as a private higher education institution under that Act; or

(cc) by any public benefit organisation as contemplated in paragraph (a) of the definition of ‘public benefit organisation’ contained in section 30(1) of the Income Tax Act that has been approved by the Commissioner in terms of section 30(3) of that Act and which has been formed for-

(A) adult basic education and training including literacy and numeracy education, registered under the Adult Basic Education and Training Act, 2000 (Act No. 52 of 2000), vocational training or technical education;

[Subitem (A) substituted by section 82 of Act 20 of 2006]

(B) the education and training of religious or social workers;

[Subitem (B) substituted by section 82 of Act 20 of 2006]

(D) ……….

[Subitem (D) deleted by section 99 of Act 32 of 2004]

(E) provision of bridging courses to enable indigent persons to enter a higher education institution as envisaged in subparagraph (bb);

[Subitem (E) substituted by section 82 of Act 20 of 2006]

[Item (cc) amended by section 45 of Act 9 of 2006 and section 82 of Act 20 of 2006]

(ii) the supply by a school, university, technikon or college solely or mainly for the benefit of its learners or students of goods or services (including domestic goods and services) necessary for and subordinate and incidental to the supply of services referred to in subparagraph (i) of this paragraph, if such goods or services are supplied for a consideration in the form of school fees, tuition fees or payment for lodging or board and lodging; or

[Subparagraph (ii) substituted by section 117 of Act 74 of 2002, amended by section 82 of Act 20 of 2006 and substituted by section 133 of Act 25 of 2015 effective on 1 April 2016]

(iii) the supply of services to learners or students or intended learners or students by the joint Matriculation Board referred to in section 15 of the Universities Act, 1955 (Act No. 61 of 1955):

[Subparagraph (iii) added by section 99 of Act 32 of 2004]

Provided that vocational or technical training provided by an employer to his employees and employees of an employer who is a connected person in relation to that employer does not constitute the supply of an educational service for the purposes of this paragraph;

[Paragraph (h) amended by section 18 of Act 136 of 1992 and section 14 of Act 20 of 1994 and substituted by section 154 of Act 60 of 2001]

(i) the supply of any goods or services by an employee organization to any of its members to the extent that the consideration for such supply consists of membership contributions.

[Paragraph (i) added by section 18 of Act 136 of 1992]

(j) the service of caring for children by a creche or an after-school care centre.

[Paragraph (j) added by section 154 of Act 60 of 2001]

(k) the supply of goods in the Republic by any person that is not a resident of the Republic and that is not a vendor, other than the supply of goods by an inbound duty and tax free shop, which have not been entered for home consumption: Provided that this paragraph shall not apply where such person applies in writing to the Commissioner, and the Commissioner, having regard to the circumstances of the case, directs that the provisions of this paragraph shall not apply to such person;

[Paragraph (k) inserted by section 109 of Act 60 of 2008 and substituted by section 147 of Act 22 of 2012 effective on 1 January 2013]

(l) the supply of any goods or services by a bargaining council that is established in terms of section 27 of the Labour Relations Act, 1995 (Act No. 66 of 1995), to any of its members in terms of section 28(1) of that Act;

[Paragraph (l) inserted by section 147 of Act 22 of 2012 and substituted by section 97 of Act 43 of 2014 effective on 1 April 2015]

(m) the supply of any goods or services by a political party registered in terms of section 15 of the Electoral Commission Act, 1996 (Act No. 51 of 1996), to any of its members to the extent that the consideration for such supply consists of membership contributions.

[Paragraph (m) inserted by section 147 of Act 22 of 2012 effective on 1 January 2013]

Section 11 (VAT) – Zero rating

Posted on March 27, 2018January 25, 2023 by admin_kmos

11. Zero rating

(1) Where, but for this section, a supply of goods would be charged with tax at the rate referred to in section 7(1), such supply of goods shall, subject to compliance with subsection (3) of this section, be charged with tax at the rate of zero per cent where-

(a) the supplier has supplied the goods (being movable goods) in terms of a sale or instalment credit agreement and-

(i) the supplier has exported the goods in the circumstances contemplated in paragraph (a), (b) or (c) of the definition of “exported” in section 1; or

(ii) the goods have been exported by the recipient and the supplier has elected to supply the goods at the zero rate as contemplated in Part 2 of the regulation referred to in paragraph (d) of the definition of ‘exported’ in section 1: Provided that –

[Words preceding the proviso substituted by section 132 of Act 25 of 2015 effective on 8 January 2016]

(aa) where a supplier has supplied the goods to the recipient in the Republic otherwise than in terms of this subparagraph, such supply shall not be charged with tax at the rate of zero per cent; and

(bb) where the goods have been removed from the Republic by the recipient in accordance with the regulation referred to in paragraph (d) of the definition of ‘exported’ in section 1, such tax shall be refunded to the recipient in accordance with the provisions of section 44(9); or

[Item (bb) substituted by section 132 of Act 25 of 2015 effective on 8 January 2016]

[Paragraph (a) substituted by section 27 of Act 136 of 1991 and section 85 of Act 53 of 1999]

(b) the goods have been supplied in the course of repairing, renovating, modifying, treating, processing, cleaning, reconditioning or manufacture of any goods to which subsection (2)(g)(ii) or (iv) refers and the goods supplied—

(i) are wrought into, affixed to, attached to or otherwise form part of those other goods; or

(ii) being consumable goods, become unusable or worthless as a direct result of being used in that repair, renovation, modification or treatment process; or

[Paragraph (b) amended by section 27(b) of Act 136 of 1991 and by section 81(1)(a) of Act 17 of 2017 effective on 1 April 2018]

(c) the goods (being movable goods) are supplied to a lessee or other person under a rental agreement, charter party or agreement for chartering, if the goods are used exclusively in an export country or by a customs controlled area enterprise or an SEZ operator in a customs controlled area: Provided that this subsection shall not apply where a ‘motor car’ as defined in section 1 is supplied to a person located in a customs controlled area;

[Paragraph (c) substituted by section 98 of Act 32 of 2004, section 81 of Act 20 of 2006 and section 25 of Act 16 of 2016 effective on the date on which the Special Economic Zones Act, 2014 (Act No. 16 of 2014), came into operation, 9 February 2016]

(d) the goods (being movable goods) are supplied to a lessee or other person under a rental agreement, charter party or agreement for chartering, if those goods are used by that lessee or other person exclusively in any commercial, financial, industrial, mining, farming, fishing or professional concern conducted in an export country and payment of rent or other consideration under that agreement is effected from such export country; or

[Paragraph (d) substituted by section 98 of Act 32 of 2004]

(e) the supply is to a registered vendor of an enterprise or of a part of an enterprise which is capable of separate operation, where the supplier and the recipient have agreed in writing that such enterprise or part, as the case may be, is disposed of as a going concern: Provided that-

(i) such enterprise or part, as the case may be, shall not be disposed of as a going concern unless-

(aa) such supplier and such recipient have, at the time of the conclusion of the agreement for the disposal of the enterprise or part, as the case may be, agreed in writing that such enterprise or part, as the case may be, will be an income-earning activity on the date of transfer thereof; and

(bb) the assets which are necessary for carrying on such enterprise or part, as the case may be, are disposed of by such supplier to such recipient; and

(cc) in respect of supplies on or after 1 January 2000, such supplier and such recipient have at the time of the conclusion of the agreement for the disposal of such enterprise or part, as the case may be, agreed in writing that the consideration agreed upon for that supply is inclusive of tax at the rate of zero per cent;

[Subparagraph (cc) inserted by section 85 of Act 53 of 1999]

(ii) where the enterprise or part, as the case may be, disposed of as a going concern has been carried on in, on or in relation to goods or services applied mainly for purposes of such enterprise or part, as the case may be, and partly for other purposes, such goods or services shall, where disposed of to such recipient, for the purposes of this paragraph and section 18A be deemed to form part of such enterprise or part, as the case may be, notwithstanding the provisions of paragraph (v) of the proviso to the definition of “enterprise” in section 1; or

[Paragraph (e) substituted by section 17 of Act 136 of 1992 and section 13 of Act 20 of 1994]

(f) the supply is to the South African Reserve Bank, the South African Mint Company (Proprietary) Limited or any bank registered under the Banks Act, 1990 (Act No. 94 of 1990), of gold in the form of bars, blank coins, ingots, buttons, wire, plate or granules or in solution, which has not undergone any manufacturing process other than the refining thereof or the manufacture or production of such bars, blank coins, ingots, buttons, wire, plate, granules or solution; or

[Paragraph (f) substituted by section 17 of Act 136 of 1992 and section 13 of Act 20 of 1994]

(g) the supply is of such goods used or consumed for agricultural, pastoral or other farming purposes as are set forth in Part A of Schedule 2, provided such supply is made in compliance with such conditions as may be prescribed in the said Part; or

[Paragraph (g) substituted by section 17 of Act 136 of 1992]

(h) the goods consist of fuel levy goods referred to in Fuel Item Levy numbers 195.10.03, 195.10.17, 195.20.01 and 195.20.03 in Part 5A of Schedule No. 1 to the Customs and Excise Act; or

[Paragraph (h) substituted by section 27 of Act 136 of 1991, section 105 of Act 31 of 2005 and section 44 of Act 9 of 2006]

(hA) the goods consist of petroleum oil and oils obtained from bituminous minerals, known as crude, referred to in Heading No. 27.09 in Chapter 27 of Part 1 of Schedule No. 1 to the Customs and Excise Act when supplied for the purpose of being refined for the production of fuel levy goods as defined in section 1 of the Customs and Excise Act; or

[Paragraph (hA) inserted by section 27 of Act 136 of 1991 and substituted by section 105 of Act 31 of 2005]

(hB) ……….

[Paragraph (hB) inserted by section 27 of Act 97 of 1993, substituted by section 153 of Act 60 of 2001 and deleted by section 44 of Act 9 of 2006]

(i) the goods are supplied as contemplated in section 8 (9);

[Paragraph (i) substituted by section 27 of Act 97 of 1993 and section 169 of Act 45 of 2003]

(j) the goods consist of such foodstuffs as are set forth in Part B of Schedule 2, but subject to such conditions as may be prescribed in the said Part; or

[Paragraph (j) inserted by section 27 of Act 136 of 1991 and substituted by section 17 of Act 136 of 1992]

(k) the goods are gold coins supplied as such and which the Reserve Bank has issued in the Republic in accordance with the provisions of section 14 of the South African Reserve Bank Act, 1989 (Act No. 90 of 1989), or which remain in circulation as contemplated in the proviso to subsection (1) of that section; or

[Paragraph (k) inserted by section 17 of Act 136 of 1992]

(l) the goods consist of illuminating kerosene (marked) intended for use as fuel for illuminating or heating, referred to in Fuel Item Levy number 195.10.13 in Part 5A of Schedule No. 1 to the Customs and Excise Act and are not mixed or blended with another substance; or

[Paragraph (l) inserted by section 43 of Act 5 of 2001 and substituted by section 105 of Act 31 of 2005 and section 44 of Act 9 of 2006]

(m) a vendor supplies movable goods, (excluding any ‘motor car’ as defined in section 1), in terms of a sale or instalment credit agreement to a customs controlled area enterprise or an SEZ operator and those goods are physically delivered to that customs controlled area enterprise or SEZ operator in a customs controlled area either-

[Words preceding subparagraph (i) substituted by section 25 of Act 16 of 2016 effective on the date on which the Special Economic Zones Act, 2014 (Act No. 16 of 2014), came into operation, 9 February 2016]

(i) by the supplier; or

(ii) by a cartage contractor, whose activities include transporting goods and who is engaged by the supplier to deliver the goods and that supplier is liable for the full cost relating to that delivery;

[Subparagraph (ii) substituted by section 132 of Act 25 of 2015 effective on 1 April 2016]

[Paragraph (m) substituted by section 98 of Act 32 of 2004 and section 81 of Act 20 of 2006]

(mA) a vendor supplies fixed property situated in a customs controlled area to a customs controlled area enterprise or an SEZ operator under any agreement of sale or letting or any other agreement under which the use or permission to use such fixed property is granted;

[Paragraph (mA) inserted by section 81 of Act 20 of 2006 and section 25 of Act 16 of 2016 effective on the date on which the Special Economic Zones Act, 2014 (Act No. 16 of 2014), came into operation, 9 February 2016]

(n) the goods consist of-

(i) any old order right or OP26 right as defined in Schedule II of the Mineral and Petroleum Resources Development Act, 2002 (Act No. 28 of 2002), converted into a new right pursuant to item 7(3) of that Schedule if that supply is made pursuant to that conversion; or

[Subparagraph (i) substituted by section 134 of Act 24 of 2011 with effect from 10 January 2012]

(ii) ……….

[Subparagraph (ii) substituted by section 98 of Act 32 of 2004 and deleted by section 134 of Act 24 of 2011 with effect from 10 January 2012]

[Paragraph (n) added by section 169 of Act 45 of 2003]

(o) ……….

[Paragraph (o) added by section 169 of Act 45 of 2003 and deleted by section 105 of Act 31 of 2005]

(p)

(i) the supply of an enterprise or part of an enterprise as a going concern, by a vendor to that vendor’s branch or division, which branch or division is separately registered in terms of section 50(2): Provided that that enterprise or part, as the case may be, shall not be disposed of as a going concern unless-

(aa) that enterprise or part is capable of separate operation; and

(bb) will be an income-earning activity on the date of transfer thereof; and

(cc) a tax invoice issued in accordance with section 20 in relation to that supply is inclusive of tax at the rate of zero per cent; or

(ii) the supply of an enterprise, branch or division, as contemplated in section 50(2), as a going concern to a separately registered enterprise of that vendor: Provided that that enterprise or part, as the case may be, shall not be disposed of as a going concern unless-

(aa) that enterprise or part is capable of separate operation; and

(bb) will be an income-earning activity on the date of transfer thereof; and

(cc) a tax invoice issued in accordance with section 20 in relation to that supply is inclusive of tax at the rate of zero per cent;

[Paragraph (p) inserted by section 98 of Act 32 of 2004]

(q) the goods-

(i) are supplied by a vendor to a person who is not a resident of the Republic and not a vendor and who has contracted with that vendor to deliver goods to a recipient, who is a vendor in the Republic; and

(ii) form part of a supply by the person referred to in paragraph (i) to the recipient; and

(iii) are used by the recipient wholly for the purposes of consumption, use or supply in the course of making taxable supplies; or

[Paragraph (q) added by section 105 of Act 31 of 2005 and amended by section 81 of Act 20 of 2006]

(r) compensation is paid by a public authority in terms of section 19 of the Animal Diseases Act, 1984 (Act No. 35 of 1984) for the supply of a ‘controlled animal or thing’ as defined in that Act to that public authority:

[Paragraph (r) added by section 81 of Act 20 of 2006]

(s) the goods (being fixed property) are supplied to the Cabinet member responsible for land reform who acquired those goods in terms of the Provision of Land and Assistance Act, 1993 (Act No. 126 of 1993), or section 42E of the Restitution of Land Rights Act, 1994 (Act No. 22 of 1994); or

[Paragraph (s) added by section 108 of Act 60 of 2008 and substituted by section 169 of Act 31 of 2013 effective on 1 April 2014]

(t) the goods (being fixed property) are supplied to a person to the extent that the consideration for those goods is an advance or subsidy granted in terms of the Provision of Land and Assistance Act, 1993 (Act No. 126 of 1993); or

[Paragraph (t) added by section 108 of Act 60 of 2008 with effect from 31 Oct 2009]

(u) the supply of goods, other than the supply of goods by an inbound duty and tax free shop, which have been imported and entered for storage in a licensed Customs and Excise storage warehouse but have not been entered for home consumption; or

[Paragraph (u) added by section 108 of Act 60 of 2008]

(v) the supply of goods by an inbound duty and tax free shop; or

[Paragraph (v) added by section 108(1)(a) of Act 60 of 2008 and amended by section 70(1) of Act 34 of 2019 deemed effective on 1 April, 2019]

(w) the goods supplied consist of sanitary towels (pads) as are set forth in Part C of Schedule 2:

[Paragraph (w) added by section 70(1) of Act 34 of 2019 deemed effective on 1 April, 2019]

Provided that paragraphs (a), (b), (c), (d) and (i) of this subsection shall not apply in respect of any supply of goods by a vendor if in respect of such goods input tax contemplated in paragraph (b) of the definition of “input tax” in section 1 has been deducted in terms of section 16 (3) by that vendor or any other person where that vendor and that other person are connected persons.

[Subsection (1) amended by section 28 of Act 27 of 1997]

(2) Where, but for this section, a supply of services, other than services contemplated in section 11(2)(k) that are electronic services, would be charged with tax at the rate referred to in section 7(1), such supply of services shall, subject to compliance with subsection (3) of this section, be charged with tax at the rate of zero per cent where-

[Words preceding paragraph (a) substituted by section 96 of Act 43 of 2014 effective on 1 April 2015]

(a) the services (not being ancillary transport services) comprise the transport of passengers or goods-

(i) from a place outside the Republic to another place outside the Republic; or

[Subparagraph (i) substituted by section 13 of Act 20 of 1994]

(ii) from a place in the Republic to a place in an export country; or

[Subparagraph (ii) substituted by section 13 of Act 20 of 1994]

(iii) from a place in an export country to a place in the Republic; or

[Subparagraph (iii) substituted by section 13 of Act 20 of 1994]

(b) the services comprise the transport of passengers from a place in the Republic to another place in the Republic to the extent that that transport is by aircraft and constitutes “international carriage” as defined in Article 1 of the Convention set out in the Schedule to the Carriage by Air Act, 1946 (Act No. 17 of 1946); or

[Paragraph (b) substituted by section 13 of Act 20 of 1994]

(c) the services (including any ancillary transport services) comprise the transport of goods from a place in the Republic to another place in the Republic to the extent that those services are supplied by the same supplier as part of the supply of services to which paragraph (a) applies; or

[Paragraph (c) substituted by section 13 of Act 20 of 1994]

(d)

(i) the services comprise the—

(aa) insuring;

(bb) arranging of the insurance; or

(cc) arranging of the transport,

of passengers or goods to which any provisions of paragraph (a), (b) or (c) apply; or

(ii) insuring or the arranging of the insurance of passengers on an international journey, where the insurance of those passengers is provided under a single inbound or outbound insurance policy in respect of which a single premium is levied; or

[Paragraph (d) substituted by section 81(1)(b) of Act 17 of 2017 effective on 1 April 2018]

(e) the services comprise the transport of goods or any ancillary transport services supplied directly in connection with the exportation from or the importation into the Republic of goods or the movement of goods through the Republic from one export country to another export country, where such services are supplied directly to a person who is not a resident of the Republic and is not a vendor, otherwise than through an agent or other person; or

[Paragraph (e) substituted by section 13 of Act 20 of 1994]

(f) the services are supplied directly in connection with land, or any improvement thereto, situated in any export country; or

(g) the services are supplied directly in respect of-

(i) movable property (excluding debt securities, equity securities or participatory securities, as respectively defined in section 2(2), listed on an exchange as defined in section 1 of the Financial Markets Act, 2012 (Act 19 of 2012) and licensed under section 9 of that Act) situated in any export country at the time the services are rendered; or;

[Subparagraph (i) substituted by section 81(1)(c) of Act 17 of 2017 effective on 1 April 2018]

(ii) goods temporarily admitted into the Republic from an export country which are exempt from tax on importation under Items 470 and 480 of paragraph 8 of Schedule 1; or

[Subparagraph (ii) amended by section 27 of Act 97 of 1993 and substituted by section 153 of Act 60 of 2001]

(iii) goods in respect of which the provisions of paragraph (b) or (c) of the definition of “exported” in section 1 apply; or

(iv) the repair, maintenance, cleaning or reconditioning of a foreign-going ship or foreign-going aircraft; or

(h) the services comprise-

(i) the handling, pilotage, salvage or towage of any foreign-going ship or foreign-going aircraft while situated in the Republic; or

[Subparagraph (i) substituted by section 13 of Act 20 of 1994]

(ii) services provided in connection with the operation or management of any foreign-going ship or foreign-going aircraft; or

(iii) the storage, repair, maintenance, cleaning, management or arranging the provision of a container referred to in paragraph (1)(i) of Schedule 1 or the arranging of those services,

[Subparagraph (iii) inserted by section 17 of Act 136 of 1992 and substituted by section 98 of Act 32 of 2004]

where the services are supplied directly to a person who is not a resident of the Republic and is not a vendor, otherwise than through an agent or other person; or

[Paragraph (h) amended by section 13 of Act 20 of 1994]

(i) the services of arranging-

(i) the supply of goods as contemplated in paragraph (b) or (c) of the definition of “exported”; or

(ii) the supply of services referred to in paragraph (g)(iv) or (h); or

(iii) the transport of goods (including ancillary transport services) within the Republic,

[Subparagraph (iii) substituted by section 13 of Act 20 of 1994]

for a person who is not a resident of the Republic and is not a vendor; or

[Paragraph (i) amended by section 13 of Act 20 of 1994]

(j) the services comprise the repair, maintenance, cleaning or reconditioning of a railway train operated by a person who is not a resident of the Republic and is not a vendor; or

[Paragraph (j) substituted by section 13 of Act 20 of 1994]

(k) the services are physically rendered elsewhere than in the Republic or to a customs controlled area enterprise or an SEZ operator in a customs controlled area; or

[Paragraph (k) substituted by section 13 of Act 20 of 1994, section 28 of Act 27 of 1997, section 169 of Act 45 of 2003, section 81 of Act 20 of 2006 and section 25 of Act 16 of 2016 effective on the date on which the Special Economic Zones Act, 2014 (Act No. 16 of 2014), came into operation, 9 February 2016]

(l) the services are supplied to a person who is not a resident of the Republic, not being services which are supplied directly-

(i) in connection with land or any improvements thereto situated inside the Republic; or

(ii) in connection with movable property (excluding debt securities, equity securities or participatory securities) situated inside the Republic at the time the services are rendered, except movable property which-

(aa) is exported to the said person subsequent to the supply of such services; or

(bb) forms part of a supply by the said person to a registered vendor and such services are supplied to the said person for purposes of such supply to the registered vendor; or

[Subparagraph (ii) amended by section 85 of Act 53 of 1999]

(iii) to the said person or any other person, other than in circumstances contemplated in subparagraph (ii) (bb), if the said person or such other person is in the Republic at the time the services are rendered,

[Subparagraph (iii) substituted by section 85 of Act 53 of 1999]

and not being services which are the acceptance by any person of an obligation to refrain from carrying on any enterprise, to the extent that the carrying on of that enterprise would have occurred within the Republic; or

[Paragraph (l) substituted by section 13 of Act 20 of 1994, amended by section 28 of Act 27 of 1997 and substituted by section 89 of Act 30 of 1998]

(m) the services comprise-

(i) the filing, prosecution, granting, maintenance, transfer, assignment, licensing or enforcement, including the incidental supply by the supplier of such services of any other services which are necessary for the supply of such services, of intellectual property rights, including patents, designs, trade marks, copyrights, know-how, confidential information, trade secrets or similar rights; or

[Subparagraph (i) substituted by section 13 of Act 20 of 1994]

(ii) the acceptance by any person of an obligation to refrain from pursuing or exercising in whole or in part any such rights,

where and to the extent that those rights are for use outside the Republic; or

[Paragraph (m) amended by section 13 of Act 20 of 1994]

(n) the services comprise the carrying on by a welfare organisation of the activities referred to in the definition of ‘welfare organisation’ in section 1 and to the extent that any payment in respect of those services is made in terms of section 8(5) those services shall be deemed to be supplied by that organisation to a public authority or municipality; or

[Paragraph (n) substituted by section 169 of Act 45 of 2003 and section 44 of Act 9 of 2006]

(o) the services are supplied as contemplated in section 8(9) by a vendor, not being services which are supplied directly-

(i) in connection with land or any improvements thereto situated inside the Republic; or

(aa) is consigned or delivered to the said person at an address in an export country subsequent to the supply of such services; or

(bb) forms part of a supply by the said person to a registered vendor and such services are supplied to the said person for purposes of such supply to the registered vendor; or

(iii) to the said person or any other person, other than in the circumstances contemplated in subparagraph (ii)(bb), if the said person or such other person is in the Republic at the time that the services are rendered; or

[Paragraph (o) substituted by section 27 of Act 97 of 1993 and section 169 of Act 45 of 2003 and amended by section 44 of Act 9 of 2006]

(p) ……….

[Paragraph (p) added by section 17 of Act 136 of 1992 and deleted by section 169 of Act 45 of 2003]

(q) the services are deemed to be supplied in terms of section 8(5B);

[Paragraph (q) added by section 85 of Act 53 of 1999, substituted by section 169 of Act 45 of 2003 and section 105 of Act 31 of 2005, amended by section 44 of Act 9 of 2006 and substituted by section 81 of Act 20 of 2006 and section 29 of Act 36 of 2007]

(r) the services comprise of the vocational training of employees (other than educational services contemplated in section 12(h)) for the benefit of an employer who is not a resident of the Republic and who is not a vendor: Provided that this paragraph shall not apply where the supply is made to a person who is a resident of the Republic or a vendor; or

[Paragraph (r) added by section 77 of Act 30 of 2000, amended by section 169 of Act 45 of 2003 and substituted by section 132 of Act 25 of 2015 effective on 1 April 2016]

(s) the services are deemed to be supplied to a public authority or municipality in terms of section 8(23); or

[Paragraph (s) added by section 169 of Act 45 of 2003, substituted by section 44 of Act 9 of 2006, deleted by section 132 of Act 25 of 2015 and re-inserted by section 81 of Act 17 of 2017 effective on 1 April 2017]

(t) the services are deemed to be supplied in terms of section 8(5A); or

[Paragraph (t) added by section 98 of Act 32 of 2004 and amended by section 21 of Act 9 of 2005, section 105 of Act 31 of 2005 and section 44 of Act 9 of 2006]

(u) the services are deemed to be supplied in terms of section 8(5) by a designated entity in respect of any payment made in terms of section 10(1)(f) of the Skills Development Act, 1998 (Act No. 97 of 1998), to that designated entity; or

[Paragraph (u) added by section 21 of Act 9 of 2005 and amended by section 105 of Act 31 of 2005]

(v) the services relate to goods under warranty to the extent that the services are-

(i) provided in terms of that warranty;

(ii) supplied to the warrantor for consideration under that warranty given by the warrantor who is—

(aa) not a resident of the Republic;

(bb) not a vendor; and

(cc) outside the Republic at the time the services are rendered; and

(iii) in respect of goods that were subject to tax upon importation (in terms of section 7(1)(b) of this Act); or

[Paragraph (v) added by section 105 of Act 31 of 2005 and amended by section 44 of Act 9 of 2006]

(w) a ‘municipal rate’ as defined in section 1, is levied by a municipality; or

[Paragraph (w) added by section 44 of Act 9 of 2006 and amended by section 29 of Act 36 of 2007]

(x) the services are supplied by a vendor, being the owner of a horse, to the operator of a horse-racing event to the extent of any consideration paid as a result of the successful participation of that horse in that event.

[Paragraph (x) added by section 29 of Act 36 of 2007]

[Subsection (2) amended by section 28 of Act 27 of 1997]

(y) the services as contemplated in the International Telecommunication Union Regulations contained in the Final Acts of the World Conference on International Telecommunications (Dubai, 2012) and supplied by Telecommunications Service Providers registered in the Republic in terms of the Electronic Communications Act, 2005 (Act 36 of 2005), to International Telecommunications Service Providers, provided that such services are not supplied to a branch, main business or customer of the International Telecommunications Service Providers situated in the Republic at the time the services are rendered, unless such services are international roaming services.

[Subsection (2) amended by section 28(b) of Act 27 of 1997 and by section 96(1)(b) of Act 43 of 2014 effective on 1 April, 2015. Paragraph (y) added by section 64(1) of Act 23 of 2020 and substituted by section 52(1) of Act 20 of 2021 effective on 1 January, 2022]

(3) Where a rate of zero per cent has been applied by any vendor under the provisions of this section, the vendor shall obtain and retain such documentary proof substantiating the vendor’s entitlement to apply the said rate under those provisions as is acceptable to the Commissioner.

[Subsection (3) substituted by section 108 of Act 60 of 2008]

Section 10 (VAT) – Value of supply of goods and services

Posted on March 27, 2018April 15, 2024 by admin_kmos

10. Value of supply of goods or services

(1) For the purposes of this Act the following provisions of this section shall apply for determining the value of any supply of goods or services.

(2) The value to be placed on any supply of goods or services shall, save as is otherwise provided in this section, be the amount of the consideration for such supply, as determined in accordance with the provisions of subsection (3), less so much of such amount as represents tax: Provided that-

(i) there shall be excluded from such consideration the value of any postage stamp as defined in section 1 of the Post Office Act, 1958 (Act No. 44 of 1958), when used in the payment of consideration for any service supplied by the postal company as defined in section 1 of the Post Office Act, 1958;

[Paragraph (i) substituted by section 84 of Act 53 of 1999]

(ii) where the portion of the amount of the said consideration which represents tax is not accounted for separately by the vendor, the said portion shall be deemed to be an amount equal to the tax fraction of that consideration.

[Paragraph (ii) substituted by section 82 of Act 8 of 2007]

[Subsection (2) amended by section 82 of Act 8 of 2007]

(3) For the purposes of this Act the amount of any consideration referred to in this section shall be-

(a) to the extent that such consideration is a consideration in money, the amount of the money; and

(b) to the extent that such consideration is not a consideration in money, the open market value of that consideration.

[Subsection (3) amended by section 82 of Act 8 of 2007]

(4) Where-

(a) a supply is made by a person for no consideration or for a consideration in money which is less than the open market value of the supply or the consideration cannot be determined at the time of supply;

[Paragraph (a) substituted by section 21 of Act 37 of 1996 and section 131 of Act 25 of 2015 effective on 1 April 2016]

(b) the supplier and recipient are connected persons in relation to each other; and

(c) if a consideration for the supply equal to the open market value of the supply had been paid by the recipient, he would not have been entitled under section 16(3) to make a deduction of the full amount of tax in respect of that supply,

[Paragraph (c) substituted by section 26 of Act 97 of 1993]

the consideration in money for the supply shall be deemed to be the open market value of the supply: Provided that this subsection shall not apply to the supply of a benefit or advantage of employment contemplated in section 18(3).

(4A) For the purposes of this Act, where any share in a share block company is supplied, the consideration in money for that supply shall include the amount of any allocation, delegation or transfer referred to in section 8(17).

[Subsection (4A) inserted by section 16 of Act 136 of 1992]

(5) Where goods or services are deemed to be supplied by a vendor in terms of section 8(2) or (9), the supply shall be deemed to be made for a consideration in money equal to the lesser of-

(a) the cost to the vendor of the acquisition, manufacture, assembly, construction or production of such goods or services, including-

(i) any tax charged in respect of the supply to the vendor of such goods or services or of any components, materials or services utilized by him in such manufacture, assembly, construction or production;

(ii) where such goods or any right referred to in section 8(2), when held by the vendor, constituted trading stock as defined in section 1 of the Income Tax Act, any further costs (including tax) incurred by him in respect of such goods or right as contemplated in section 22(3)(a) of that Act;

(iii) any costs (including tax) incurred by the vendor in respect of the transportation or delivery of such goods or the provision of such services in respect of such goods that are consigned or delivered or the provision of such services as contemplated in section 8(9); and

[Subparagraph (iii) substituted by section 168 of Act 45 of 2003]

(iv) where such goods or services were acquired under a supply in respect of which the consideration in money was in terms of section 10(4) deemed to be the open market value of the supply or would in terms of that section have been deemed to be the open market value of the supply were it not for the fact that the recipient would have been entitled under section 16(3) to make a deduction of the full amount of tax in respect of that supply, such open market value to the extent that it exceeds the consideration in money for that supply; or

[Subparagraph (iv) added by section 26 of Act 97 of 1993]

(b) the open market value of such supply.

(5A) ……….

[Subsection (5A) inserted by section 107 of Act 60 of 2008 effective on 1 March 2009, substituted by section 122 of Act 7 of 2010 effective on 2 November 2010 and deleted by section 133 of Act 24 of 2011 effective on 1 March 2012]

(6) For the purposes of this Act, where goods are supplied under an instalment credit agreement, the consideration in money for the supply shall be deemed to be the cash value of that supply.

(7) Where goods or services are deemed by section 18(1) or 18B(3) to be supplied by a vendor, the supply shall, subject to the provisions of subsection (8), be deemed to be made for a consideration in money equal to the open market value of such supply.

[Subsection (7) substituted by section 133 of Act 24 of 2011 with effect from 10 January 2012]

(8) Where any repairs, maintenance or insurance in respect of a motor vehicle is deemed to be supplied by a vendor by section 18(1), such supply shall be deemed to be made for a consideration in money equal to the cost (including tax) to such vendor of acquiring such repairs, maintenance or insurance: Provided that where such vendor does not maintain accurate data for the purposes of calculating such consideration in money, such supply shall be deemed to be made for a consideration in money equal to the amount determined in the manner prescribed by the Minister in the Gazette for the category of motor vehicle concerned.

[Subsection (8) amended by section 26 of Act 136 of 1991]

(9) Where goods or services are deemed by section 18(2) to be supplied by a vendor, the supply shall be deemed to be made for a consideration in money determined in accordance with the formula

A x (B – C),

in which formula-

“A” represents the lesser of-

(i)

(aa) the adjusted cost (including any tax forming part of such adjusted cost) to the vendor of the acquisition, manufacture, assembly, construction or production of those goods or services: Provided that where the goods or services were acquired under a supply in respect of which the consideration in money was in terms of section 10(4) deemed to be the open market value of the supply or would in terms of that section have been deemed to be the open market value of the supply were it not for the fact that the recipient would have been entitled under section 16(3) to make a deduction of the full amount of tax in respect of that supply, the adjusted cost of those goods or services shall be deemed to include such open market value to the extent that it exceeds the consideration in money for that supply; or

[Item (aa) substituted by section 26 of Act 97 of 1993 and section 168 of Act 45 of 2003]

(bb) where the vendor was at some time after the acquisition of such goods or services deemed by section 18(4) to have been supplied with such goods or services, the amount which was represented by “B” in the formula contemplated in section 18(4) when such goods or services were deemed to be supplied to the vendor; or

(cc) where the vendor was at some time after the acquisition of the goods or services required to make an adjustment contemplated in section 18(2) or (5), the amounts then represented by “A” in the said formula or by “B” in the formula contemplated in section 18(5) respectively, in the most recent adjustment made under section 18(2) or (5) by the vendor prior to such deemed supply of goods or services; and

(ii) the open market value of the supply of those goods or services at the time any reduction in the extent of the consumption or use of the goods is deemed by section 18(6) to take place;

“B” represents the percentage that the use or application of the goods or services for the purposes of making taxable supplies was of the total use or application of such goods or services determined under section 17(1), section 18(4) or (5) or this subsection, whichever was applicable in the period immediately preceding the 12 month period contemplated in “C”; and

“C” represents the percentage that, during the 12 month period during which the decrease in use or application of the goods or services is deemed to take place, the use or application of the goods or services for the purposes of making taxable supplies (in respect of which, if such goods or services had been acquired at the time of such use or application, a deduction of input tax would not have been denied in terms of section 17(2)(a)), was of the total use or application of the goods: Provided that where the percentage contemplated in “B” does not exceed the said percentage by more than 10 per cent of the total use or application, the said percentage shall be deemed to be the percentage determined in “B”.

[Definition of “C” substituted by section 26 of Act 136 of 1991 and amended by section 27 of Act 27 of 1997]

(10) Where domestic goods and services are supplied at an all-inclusive charge in any enterprise supplying commercial accommodation for an unbroken period exceeding 28 days, the consideration in money is deemed to be 60 per cent of the all-inclusive charge.

[Subsection (10) amended by section 68 of Act 19 of 2001 and substituted by section 152 of Act 60 of 2001]

(11) Where a service is under section 8(4)(b) deemed to be supplied, the consideration in money for the supply shall be deemed to be an amount equal to the amount retained or recovered as contemplated in that section.

(12) Where any supply of goods is a supply which would, but for the proviso to section 11(1), be charged with tax at the rate of zero per cent, the consideration in money for that supply shall be deemed to be an amount equal to the purchase price of those goods to the supplier: Provided that in any case where the deduction of input tax referred to in that proviso has been made by any other person (where that supplier and that other person are connected persons), the consideration in money for that supply shall be deemed to be an amount equal to the greater of the purchase price of those goods to that supplier and the purchase price of those goods to that other person: Provided further that for the purposes of this subsection, the purchase price of any goods shall not be reduced by any amount of input tax deducted under section 16(3) by the supplier or, as the case may be, any other person where the supplier and that other person are connected persons.

(13) Where goods or services are deemed to be supplied by a vendor under section 18(3), the consideration in money for the supply shall be deemed to be an amount equal to the cash equivalent of the benefit or advantage granted to the employee or office holder, as contemplated in section 9(7): Provided that where such benefit or advantage consists of the right to use a motor vehicle as contemplated in paragraph 2(b) of the Seventh Schedule to the Income Tax Act, the consideration in money for the supply shall be deemed to be the amount determined in the manner prescribed by the Minister in the Gazette for the category of motor vehicle used.

[Subsection (13) amended by section 26 of Act 136 of 1991 and section 16 of Act 136 of 1992]

(14) Where services are or are deemed by section 8(5) to be supplied to any public authority or municipality by any vendor the consideration in money for such supply shall be deemed to be the amount of any payment made from time to time by the public authority or municipality concerned to or on behalf of the vendor as contemplated in the said section.

[Subsection (14) substituted by section 43 of Act 9 of 2006]

(15) ……….

[Subsection (15) substituted by section 26 of Act 136 of 1991 and deleted by section 43 of Act 9 of 2006]

(16) Where a supply of goods is deemed by section 8(10) to be made by a debtor, the consideration in money for that supply shall be deemed to be an amount equal to the balance of the cash value of the goods (being the cash value thereof applied under subsection (6) in respect of the supply of the goods to the debtor under the said agreement) which has not been recovered on the date on which the supply of the goods by the debtor is deemed by section 9(8) to be made: Provided that the said balance shall be deemed to be the amount remaining after deducting from the cash value so much of the sum of the payments made by the debtor under the said agreement as, on the basis of an apportionment in accordance with the rights and obligations of the parties to the said instalment credit agreement, may properly be regarded as having been made in respect of the cash value.

[Words preceding the proviso substituted by section 168 of Act 31 of 2013 effective on 1 April 2014]

(17) Where a service is deemed by section 8(13) to be supplied to any person, the consideration in money for such supply shall be deemed to be the amount that is received in respect of the bet.

(17A) Where a service is deemed by section 8(13A) to be supplied to any vendor, the consideration in money for such supply shall be deemed to be the amount that is received as a prize or winnings.

[Subsection (17A) inserted by section 22 of Act 46 of 1996]

(18) Where a right to receive goods or services to the extent of a monetary value stated on any token, voucher or stamp (other than a postage stamp as defined in section 1 of the Postal Services Act, 1998, and any token, voucher or stamp contemplated in subsection (19) is granted for a consideration in money, the supply of such token, voucher or stamp is disregarded for the purposes of this Act, except to the extent (if any) that such consideration exceeds such monetary value.

[Subsection (18) substituted by section 152 of Act 60 of 2001]

(19) Where any token, voucher or stamp (other than a postage stamp as defined in section 1 of the Postal Services Act, 1998) is issued for a consideration in money and the holder thereof is entitled on the surrender thereof to receive goods or services specified on such token, voucher or stamp or which by usage or arrangement entitles the holder to specified goods or services, without any further charge, the value of the supply of the goods or services made upon the surrender of such token, voucher or stamp is regarded as nil.

[Subsection (19) substituted by section 152 of Act 60 of 2001]

(20) Where any token, voucher or stamp is issued by any vendor for no consideration and the holder thereof is entitled on surrender thereof to another person, being the supplier of goods or services, to a discount on the price of goods or services supplied to the holder, the consideration in money for the supply of such goods or services shall be deemed to include the monetary value stated on such token, voucher or stamp: Provided that such monetary value shall be deemed to include tax.

[Subsection (20) substituted by section 12 of Act 20 of 1994]

(21) Where any supply of entertainment is made by a vendor and in terms of section 17 no deduction of input tax was made in terms of section 16(3) in respect of the acquisition by the vendor of goods or services for the purpose of such entertainment, the value of such supply shall be deemed to be nil.

[Subsection (21A) inserted by section 16 of Act 136 of 1992 and substituted by section 12 of Act 20 of 1994]

(22A) . . . . . .

[Subsection (22A) inserted by section 21(1)(b) of Act 37 of 1996 and deleted by section 63(1) of Act 23 of 2020 effective on 1 April, 2021]

(22) Where a taxable supply is not the only matter to which a consideration relates, the supply shall be deemed to be for such part of the consideration as is properly attributable to it.

(22A) Where any supply is made which comprises the management of a superannuation scheme as contemplated in section 2(1)(i), the consideration in money for such supply shall be deemed to be the greater of the cost of making such supply or any consideration for such supply.

[Subsection (22A) inserted by section 21 of Act 37 of 1996]

(22B) Where any supply of goods is deemed to be made as contemplated in section 8(20), the consideration in money for such supply shall be deemed to be the total amount of the value placed on the importation of the goods in terms of section 13(2) and the amount of tax levied on the importation in terms of section 7(1)(b).

[Subsection (22B) inserted by section 27 of Act 27 of 1997]

(23) Save as otherwise provided in this section, where any supply is made for no consideration the value of that supply shall be deemed to be nil.

(24) Where a game viewing vehicle or a hearse is deemed to be supplied by a vendor in terms of section 8(14)(b) or (14A) the supply shall be deemed to be made for a consideration in money equal to the open market value, of that game viewing vehicle or hearse.

[Subsection (24) inserted by section 97 of Act 32 of 2004]

(25) Where any goods are deemed by section 8(24) to be supplied to any person, the consideration in money shall be deemed to be the open market value of those goods on the date contemplated in section 9(11).

[Subsection (25) added by section 104 of Act 31 of 2005]

(26) Where a service is deemed to be supplied under section 8(27), the consideration in money for the supply shall be deemed to be the excess amount contemplated in that section.

[Subsection (26) added by section 80 of Act 20 of 2006]

(27) Where any supply of goods or services is deemed to be made in terms of section 8(19), the value of such supply shall be deemed to be nil.

[Subsection (27) added by section 168 of Act 31 of 2013 effective on 1 April 2014]

(28) Where a supply of goods is deemed to be made as contemplated in section 8(29), the value of such supply shall be deemed to be nil.

[Subsection (28) added by section 80(1) of Act 17 of 2017 effective on 1 April, 2018]

(29) Where goods are deemed to be supplied by a vendor in terms of section 18D(2), the supply shall be deemed to be made for a consideration in money equal to the adjusted cost to the vendor of such fixed property or portion of such fixed property so supplied.

[Subsection (29) added by section 51(1) of Act 20 of 2021 and substituted by section 49(1) of Act 17 of 2023 effective on 1 April, 2024]

Section 9 (VAT) – Time of supply

Posted on March 27, 2018January 15, 2024 by admin_kmos

9. Time of supply

(1) For the purposes of this Act a supply of goods or services shall, except as otherwise provided in this Act, be deemed to take place at the time an invoice is issued by the supplier or the recipient in respect of that supply or the time any payment of consideration is received by the supplier in respect of that supply, whichever time is earlier.

(2) A supply of goods or services shall be deemed to take place-

(a) where the supplier and the recipient are connected persons-

(i) in the case of a supply of goods which are to be removed, at the time of the removal; and

(ii) in the case of a supply of goods which are not to be removed, at the time when they are made available to the recipient; and

(iii) in the case of a supply of services, at the time the services are performed:

Provided that this paragraph shall not apply in any case where an invoice is issued in respect of that supply or any payment is made in respect of that supply on or before-

(aa) the day on which the return is furnished for the tax period during which that supply would, but for this proviso, have been made; or

(bb) the last day prescribed by this Act for furnishing the return for the tax period during which that supply would, but for this proviso, have been made;

: Provided further that this paragraph shall not apply where the whole of the consideration or part thereof for such supply of goods or services cannot be determined at the time the goods are removed or made available or at the time the services are performed, and the recipient would have been entitled under section 16(3) at that time to make a deduction of the full amount of tax in respect of that supply, in which case the provisions of subsection (1) shall apply;

[Further proviso to paragraph (a) added by section 130 of Act 25 of 2015 effective on 1 April 2016]

(b) where that supply is a supply to which section 8(3) refers, on the day after the last day of the period during which the recipient may exercise the right under section 121 of the National Credit Act, 2005 (Act No. 34 of 2005), to rescind the agreement;

[Paragraph (b) substituted by section 172 of Act 34 of 2005 and section 28 of Act 36 of 2007]

(c) where that supply is a supply to which section 8(4) refers, at the time at which the goods are delivered to the recipient: Provided that in any case in which a supply of services is deemed to take place under section 8(4)(b), that supply of services shall be deemed to take place at the time that the agreement of sale is cancelled or terminates;

(d) where the supply is for a consideration in money received by the supplier by means of any machine, meter or other device operated by a coin, paper currency, token or by any other means-

(i) in the case of such supplier, at the time any such coin, paper currency or token is taken from that machine, meter or other device by or on behalf of the supplier or an amount is received by the supplier by other means; and

(ii) in the case of the recipient of such supply at the time the coin, paper currency or token is inserted into that machine, meter or other device by or on behalf of the recipient or when payment is tendered through other means;

[Paragraph (d) substituted by section 27 of Act 8 of 2010 effective on 2 November 2010]

(e) where the provisions of section 8(9) are applicable in respect of the consignment or delivery of goods at an address outside the Republic or the provision of any service by a vendor to his branch or main branch at the time the goods are consigned or delivered to such branch or the service is performed, as the case may be.

[Paragraph (e) substituted by section 25 of Act 136 of 1991 and section 167 of Act 45 of 2003]

(3) Notwithstanding anything in subsection (1) or (2) of this section-

(a) where goods are supplied under any rental agreement or where services are supplied under any agreement or law which provides for periodic payments, they shall be deemed to be successively supplied for successive parts of the period of the agreement or as determined by such law, and each of the successive supplies shall be deemed to take place when a payment becomes due or is received, whichever is the earlier;

(b) where and to the extent that-

(i) goods are supplied progressively or periodically under any agreement or law which provides for the consideration for that supply to be paid in instalments or periodically and in relation to the progressive or periodic supply of those goods; or

(ii) goods or services supplied directly in the construction, repair, improvement, erection, manufacture, assembly or alteration of goods are supplied under any agreement or law which provides for the consideration for that supply to become due and payable in instalments or periodically in relation to the progressive nature of the work,

those goods or services shall be deemed to be successively supplied, and each such successive supply shall be deemed to take place whenever any payment in respect of any supply becomes due, is received, or any invoice relating only to that payment is issued, whichever is the earliest;

(c) where goods are supplied under an instalment credit agreement, that supply shall, subject to the provisions of subsection (2)(b), be deemed to take place at the time the goods are delivered or the time any payment of consideration is received by the supplier in respect of that supply, whichever time is earlier;

[Paragraph (c) substituted by section 25 of Act 136 of 1991]

(d) where goods consisting of fixed property or any real right therein are supplied under a sale, that supply shall be deemed to take place-

(i) ……….

[Subparagraph (i) deleted by section 25 of Act 97 of 1993]

(ii) where registration of transfer of the goods is effected in a deeds registry, on the date of such registration; or

(iii) on the date on which any payment is made in respect of the consideration for such supply,

whichever date is earlier;

[Paragraph (d) amended by section 25 of Act 97 of 1993]

(e) where any supply of a service is deemed to be made as contemplated in section 8(13), the service shall be deemed to be supplied to the extent that payment of any amount of the bet is made, and each such supply shall be deemed to take place whenever any payment in respect of such supply is received by the supplier;

(f) where any supply of a service is deemed to be made as contemplated in section 8(13A), the supply shall be deemed to take place whenever any amount is paid out as a prize or winnings by the supplier of the services contemplated in section 8(13).

[Paragraph (f) added by section 21 of Act 46 of 1996]

(4) Subject to the provisions of subsections (2)(a) and (6)-

(a) where goods are supplied under an agreement, other than an instalment credit agreement or rental agreement, and the goods or part of them are appropriated under that agreement by the recipient in circumstances where the whole of the consideration is not determined at the time they are appropriated, that supply shall be deemed to take place when and to the extent that any payment in terms of the agreement is due or is received or an invoice relating to the supply is issued by the supplier or the recipient, whichever is the earliest; and

(b) where services are supplied under an agreement and the consideration for such services supplied is not determined at the time that such services are rendered or performed, that supply shall be deemed to take place when and to the extent that any payment in terms of the agreement is due or is received or an invoice relating to the supply is issued by the supplier or the recipient, whichever is the earliest.

[Subsection (4) substituted by section 167 of Act 31 of 2013 effective on 1 April 2014]

(5) Where any goods or any right capable of assignment, cession or surrender is deemed to be supplied by a vendor in the course of his enterprise as contemplated in section 8(2) the time of supply shall be deemed to be the time contemplated in that section.

(6) Where any supply of goods or services is deemed to be made as contemplated in section 18(1) the time of supply shall be deemed to be the time that the goods or services are applied as contemplated in the said subsection.

(7) The supply of goods or services which is deemed to be made by any vendor as contemplated in section 18(3) shall be deemed to take place at the end of the month in respect of which the cash equivalent of the benefit or advantage concerned, as determined under the Seventh Schedule to the Income Tax Act, or a portion of such cash equivalent, is in terms of the Fourth Schedule to that Act required to be included in the remuneration of the employee or office holder to whom the benefit or advantage is granted or, where such cash equivalent is not required to be included in the remuneration of the employee or office holder in terms of the said Fourth Schedule, on the last day of the year of assessment in terms of the said Act, as applicable to that employee or office holder, during which the benefit or advantage was granted to him.

(8) Where a supply of goods is deemed by section 8(10) to be made by a debtor, the time of that supply shall be deemed to be the day on which the goods are repossessed or surrendered or, where the debtor may under any law be reinstated in the debtor’s rights and obligations under such agreement, the day after the last day of any period during which the debtor may under such law be so reinstated.

[Subsection (8) substituted by section 167 of Act 31 of 2013 effective on 1 April 2014]

(9) Where any supply of goods is deemed to be made as contemplated in section 8(20), that supply shall be deemed to take place at the time the tax payable on importation of the goods is paid by the agent.

[Subsection (9) added by section 26 of Act 27 of 1997]

(10) Where any supply of a game viewing vehicle or a hearse is deemed to be made as contemplated in section 8(14)(b) or 8(14A) the time of supply shall be deemed to be the time that the game viewing vehicle or hearse is supplied as contemplated in those sections.

[Subsection (10) added by section 96 of Act 32 of 2004]

(11) Where any supply of goods is deemed to be made as contemplated in section 8(24), that supply shall be deemed to take place on the last day of the applicable period contemplated in section 8(24).

[Subsection (11) added by section 103 of Act 31 of 2005]

(12) Where any supply of goods is deemed to be made as contemplated in section 8(29), that supply shall be deemed to take place at the time the leasehold improvements are contemplated.

[Subsection (12) added by section 79(1) of Act 17 of 2017 effective on 1 April 2018]

(13) Where any supply of goods or services is deemed to be made as contemplated in section 18D(2) the time of supply shall be deemed to be the date within the tax period in which the agreement for the letting and hiring of the accommodation in a dwelling comes into effect or in which the dwelling is occupied, whichever comes first.

[Subsection (13) inserted by section 50(1) of Act 20 of 2021 and substituted by section 28(1) of Act 20 of 2022 deemed effective on 1 April, 2022]

Section 8A (VAT) – Sharia compliant financing arrangements

Posted on March 27, 2018July 17, 2020 by admin_kmos

8A. Sharia compliant financing arrangements

(1) For the purposes of this Act, in the case of any murabaha as defined in section 24JA(1) of the Income Tax Act–

(a) the financier shall be deemed not to have acquired or supplied goods under the sharia arrangement;

[Paragraph (a) substituted by section 132 of Act 24 of 2011 effective on 1 January 2013]

(b) the client shall be deemed to have acquired the goods-

(i) from the seller for consideration equal to the amount paid by the financier to the seller; and

(ii) at such time as the supply was made by the seller by virtue of the transaction between the seller and the financier; and

[Paragraph (b) substituted by section 132 of Act 24 of 2011 effective on 1 January 2013]

(c) any premium paid or payable to the financier by the client shall be deemed to be consideration in respect of a financial service supplied by the financier as contemplated in section 2(1)f): Provided that this paragraph shall not apply to the extent to which the consideration constitutes any fee, commission or similar charge.

[Paragraph (c) substituted by section 132 of Act 24 of 2011 effective on 1 January 2013]

(2) For the purposes of this Act, in the case of any diminishing musharaka as defined in section 24JA(1) of the Income Tax Act–

(a) the bank shall be deemed not to have acquired or supplied goods under the sharia arrangement;

(b)

(i) where the bank and the client jointly acquire goods, the client shall be deemed to have acquired the bank’s interest in the goods-

(aa) for an amount equal to the amount payable by the bank in respect of its interest in the goods; and

(bb) at the time that the seller of the goods was divested of any interest in the goods by virtue of the transaction between the seller and the bank; or

(ii) where the bank acquires an interest in the goods from the client, the client shall be deemed not to have supplied an interest in the goods to the bank; and

(c) any amount contemplated in section 24JA(6)(a) of the Income Tax Act paid or payable to the bank by the client shall be deemed to be consideration in respect of an exempt financial service supplied by the bank as contemplated in section 2(1)(f): Provided that this paragraph shall not apply to the extent to which the consideration constitutes any fee, commission or similar charge.

[Paragraph (c) amended by section 69 of Act 34 of 2019]

KMOS

Category: Value-Added Tax Act No. 89 of 1991

Section 17 (VAT) – Permissible deductions in respect of input tax

Section 16 (VAT) – Calculation of tax payable

Section 15 (VAT) – Accounting basis

Section 14 (VAT) – Collection of value-added tax on imported services, determination of value thereof and exemptions from tax

Section 13 (VAT) – Collection of tax on importation of goods, determination of value thereof and exemptions from tax

Section 12 (VAT) – Exempt supplies

Section 9 (VAT) – Time of supply

Section 8A (VAT) – Sharia compliant financing arrangements