Section 28 (VAT) – Returns and payments of tax

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28. Returns and payments of tax

(1)     Every vendor shall, within the period ending on the twenty-fifth day of the first month commencing after the end of a tax period relating to such vendor or, where such tax period ends on or after the first day and before the twenty-fifth day of a month, within the period ending on such twenty-fifth day-

[Words preceding paragraph (a) substituted by section 41 of Act 61 of 2008 and section 31 of Act 21 of 2012 effective on 20 December 2012]

(a)     furnish the Commissioner with a return reflecting such information as may be required for the purpose of the calculation of tax in terms of section 14 or 16; and

[Paragraph (a) substituted by section 37 of Act 32 of 2005 and section 31 of Act 8 of 2010 effective on 2 November 2010]

(b)     calculate the amounts of such tax in accordance with the said section and pay the tax payable to the Commissioner or calculate the amount of any refund due to the vendor:

Provided that-


(i)                ……….

[Subparagraph (i) deleted by section 271 of Act 28 of 2011 effective on 1 October 2012]

(ii)     where payment of the full amount of the tax is effected by means of a debit order and the requirements for the transfer of the tax have been met by the vendor, such debit order shall not be effected prior to the last business day of the month during which the said twenty-fifth day falls and the period within which the tax is required to be paid shall be deemed to end on the last business day of such month;

[Subparagraph (ii) substituted by section 32 of Act 36 of 2007]

(iii)    a vendor registered with the Commissioner to submit returns electronically is deemed to have submitted the return and made payment within the period contemplated in subsection (1) if the vendor submits the returns and makes full payment of the amount of tax electronically in the prescribed form and manner within the period ending on the last business day of the month during which that twenty-fifth day falls;

[Subparagraph (iii) substituted by section 32 of Act 36 of 2007, section 271 of Act 28 of 2011 effective on 1 October 2012 and section 31 of Act 21 of 2012 effective on 20 December 2012]

(2)     Every vendor who is registered in terms of the provisions of Part III shall within the period allowed by subsection (1) of this section furnish the return referred to in that subsection in respect of each tax period relating to such vendor, whether or not tax is payable or a refund is due in respect of such period.

Section 27 (VAT) – Tax period

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27. Tax period

(1)     For the purposes of this section-

“Category A” means the category of vendors whose tax periods are periods of two months ending on the last day of the months of January, March, May, July, September and November of the calendar year;


“Category B” means the category of vendors whose tax periods are periods of two months ending on the last day of the months of February, April, June, August, October and December of the calendar year;


“Category C” means the category of vendors whose tax periods are periods of one month ending on the last day of each of the 12 months of the calendar year;


“Category D” means the category of vendors whose tax periods are periods of six months ending on the last day of February and August of the calendar year or, where any vendor falling within this category makes written application therefor, on the last day of such other months as the Commissioner may approve;


“Category E” means the category of vendors whose tax periods are periods of twelve months ending on the last day of their “year of assessment” as defined in section 1 of the Income Tax Act or where any vendor falling within this category makes written application therefor, on the last day of such other month as the Commissioner may approve.

[Definition of “Category E” added by section 78 of Act 30 of 2000]

“Category F” ……….

[Definition of “Category F” added by section 11 of Act 10 of 2005 and deleted by section 28 of Act 44 of 2014 effective on 1 July 2015]

(2)

(a)     Every vendor, not being a vendor who falls within Category C, D or E as contemplated in subsection (3), (4) or (4A), shall fall within Category A or Category B.

[Paragraph (a) substituted by section 78 of Act 30 of 2000, section 11 of Act 10 of 2005 and section 28 of Act 44 of 2014 effective on 1 July 2015]


(b)     The Commissioner shall determine whether such vendor falls within Category A or Category B and notify the vendor accordingly.


(c)     The determinations made by the Commissioner under paragraph (b) shall be made so as to ensure that approximately equal numbers of vendors fall within Category A and Category B.


(d)     The Commissioner may from time to time direct that any vendor falling within Category A shall, with effect from the commencement of a future period, fall within Category B, or vice versa.

(3)     A vendor shall fall within Category C if-

(a)     the total value of the taxable supplies of the vendor (including the taxable supplies of any branches, divisions or separate enterprises of the vendor registered as separate vendors under section 50(2))-


(i)      has in the period of 12 months ending on the last day of any month of the calendar year exceeded R30 million; or


(ii)     is likely to exceed that amount in the period of 12 months beginning on the first day of any such month; or

[Paragraph (a) amended by section 34 of Act 136 of 1991]


(b)     the vendor has applied in writing for the tax periods in his case to be on a monthly basis; or


(c)     the vendor has repeatedly made default in performing any of his obligations in terms of this Act,


and the Commissioner has directed that, with effect from the commencement date or such later date as may be appropriate, the vendor shall fall within Category C: Provided that a vendor falling within Category C shall cease to fall within that Category with effect from the commencement of a future period notified by the Commissioner, if the vendor has applied in writing to be placed within Category A, B, D or E and the Commissioner is satisfied that by reason of a change in the vendor’s circumstances he satisfies the requirements of this section for placing within Category A, B, D or E.

[Words following paragraph (c) substituted by section 28 of Act 44 of 2014 effective on 1 July 2015]

[Subsection (3) amended by section 78 of Act 30 of 2000 and section 11 of Act 10 of 2005]

(4)     A vendor shall fall within Category D if-

(a)

(i)      the vendor’s enterprise consists solely of agricultural, pastoral or other farming activities or the vendor is a branch, division or separate enterprise which is deemed by subsection (5) of section 23 to be a separate person for the purposes of that section and is as such registered under that section or the vendor is a branch, division or a separate enterprise registered as a separate vendor under section 50(2);


(ii)     the activities of any such branch, division or separate enterprise consist solely of agricultural, pastoral or other farming activities and activities of that kind are not carried on in any other branch, division or separate enterprise of the vendor or the association not for gain, as the case may be, by whom a written application referred to in subparagraph (v) is made;


(ii)     the total value of the taxable supplies of the vendor from agricultural, pastoral or other farming activities-


(aa)   has in the period of 12 months ending on the last day of any month of the calendar year not exceeded R1,5 million; and


(bb)   is not likely to exceed that amount in the period of 12 months commencing at the end of the period referred to in item (aa);


(iv)  the vendor does not fall within Category C; and


(v)     the vendor whose enterprise consists solely of agricultural, pastoral or other farming activities or the vendor referred to in section 50(2) or the association not for gain referred to in section 23(5), as the case may be, has made a written application to the Commissioner, in such form as the Commissioner may prescribe, for such first-mentioned vendor or the branch, division or separate enterprise in question, as the case may be, to be placed within Category D; or

(b)     the vendor is a micro business that is registered in terms of the Sixth Schedule to the Income Tax Act and has made written application in such form as the Commissioner may prescribe, to be placed in Category D,


and the Commissioner has directed that, with effect from the commencement date or such later date as may be appropriate, the vendor shall fall within Category D: Provided that a vendor falling within Category D shall cease to fall within that Category with effect from the commencement of a future period notified by the Commissioner, if written application is made by the person who made the application referred to in subparagraph (v) for the vendor to be placed within Category A, B, C or E or the Commissioner is satisfied that by reason of a change in circumstances that vendor should be placed within Category A, B, C or E.

[Words following paragraph (b) substituted by section 28 of Act 44 of 2014 effective on 1 July 2015]

[Subsection (4) amended by section 34 of Act 136 of 1991, section 78 of Act 30 of 2000, section 11 of Act 10 of 2005 and section 50 of Act 9 of 2006 and substituted by section 30 of Act 21 of 2012 effective on 1 March 2014]

(4A)  A vendor shall fall within Category E if-

(a)     the vendor is a company or a trust fund;


(b)     the vendor’s enterprise consists solely of one or more of the activities of-


(i)    letting of fixed property or the renting of movable goods to; or


(ii)   the administration or management of,


companies which are connected persons in relation to the vendor;


(c)     the recipients of those supplies are all registered vendors and are entitled to deductions of the full amount of tax in respect of those supplies;


(d)     tax invoices are issued once a year and payments of consideration for these supplies, by agreement between the parties, only become due once a year at the end of the “year of assessment” as defined in section 1 of the Income Tax Act of the vendor making the supplies; and


(e)     the vendor has made written application to the Commissioner in such form as the Commissioner may prescribe, to be placed in Category E,


and the Commissioner has directed that, with effect from a date which he considers appropriate, the vendor shall fall within Category E, provided that a vendor falling within Category E shall cease to fall within that Category with effect from a date notified by the Commissioner if-


(i)      written application is made by the person who made the application referred to in paragraph (e) for the vendor to be placed in a different Category; or


(ii)     the Commissioner is satisfied that by reason of a change in circumstances, that vendor should be placed in Category A, B, C or D; or

[Paragraph (ii) substituted by section 11 of Act 10 of 2005 and section 28 of Act 44 of 2014 effective on 1 July 2015]


(iii)  the vendor’s placing in Category E results in any financial loss (including any loss of interest) to the State.

[Subsection (4A) inserted by section 78 of Act 30 of 2000]

(4B) ……….

[Subsection (4B) inserted by section 11 of Act 10 of 2005, amended by section 50 of Act 9 of 2006 and deleted by section 28 of Act 44 of 2014 effective on 1 July 2015]

(5)     For the purposes of subsection (3)(a) and subsection (4)(a)(iii)-

[Words preceding paragraph (a) substituted by section 22 of Act 39 of 2013 effective on 1 March 2014]

(a)     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 paragraph, but no regard shall be had to any tax charged in respect of such supply; and


(b)     the total value of the taxable supplies of a vendor within any period of 12 months referred to in subsection (3)(a) or (4)(a)(iii) shall not be deemed to have exceeded or be likely to exceed the amount referred to in subsection (3)(a) or the amount referred to in subsection (4)(a)(iii), as the case may be, where that total value exceeds or is likely to exceed that amount, as the case may be, solely as a consequence of-

[Words preceding item (i) substituted by section 25 of Act 4 of 2008 effective on 1 March 2008 and section 22 of Act 39 of 2013 effective on 1 March 2014]

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


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


(iii)  abnormal circumstances of a temporary nature.

[Paragraph (b) amended by section 50 of Act 9 of 2006]

(6)     The tax periods applicable under this Act to any vendor shall be the tax periods applicable to the Category within which the vendor falls as contemplated in this section: Provided that-

(i)      the first such period shall commence on the commencement date or, where any person becomes a vendor on a later date, such later date;


(ii)     any tax period ending on the last day of a month, as applicable in respect of the relevant Category, may, instead of ending on such last day, end on a fixed day approved by the Commissioner, which day shall fall within 10 days before or after such last day: Provided that the future tax period so approved by the Commissioner must be used by the vendor for a minimum period of 12 months commencing from the tax period the change is made;


(iii)    the first day of any tax period of the vendor subsequent to the vendor’s first tax period shall be the first day following-


(a)    the last day of the vendor’s preceding tax period; or


(b)   the fixed day as approved by the Commissioner in terms of paragraph (ii).

[Subsection (6) amended by section 28 of Act 136 of 1992 and section 78 of Act 30 of 2000 and substituted by section 271 of Act 28 of 2011 effective on 1 October 2012]

Section 26 (VAT) – Liabilities not affected by person ceasing to be vendor

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26. Liabilities not affected by person ceasing to be vendor

 

The obligations and liabilities under this Act or the Tax Administration Act of any person in respect of anything done, or omitted to be done, by that person while that person is a vendor shall not be affected by the fact that that person ceases to be a vendor, or by the fact that, being registered as a vendor, the Commissioner cancels that person’s registration as a vendor.

[Section 26 substituted by section 271 of Act 28 of 2011 effective on 1 October 2012]

Section 25 (VAT) – Vendor to notify change of status

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25. Vendor to notify change of status

In addition to any requirement under the Tax Administration Act, every vendor shall within 21 days notify the Commissioner in writing of-

[Words preceding paragraph (a) substituted by section 271 of Act 28 of 2011 effective on 1 October 2012]

(a)     any change in the constitution or nature of the principal enterprise or enterprises of that vendor;

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

(b)     any change of address at or from which, or the name in which, any enterprise is carried on by that vendor;

(c)     any change whereby that vendor ceases to satisfy the conditions provided in section 15(2), where the Commissioner has given a direction in respect of that vendor in terms of that section;

(d)     any change whereby the provisions of section 27(3)(a) become applicable in the case of that vendor;

(dA) ……..

[Paragraph (dA) inserted by section 10(1) of Act 10 of 2005 and deleted by section 9 of Act 22 of 2018]

(e)     any change in the composition of the members of a partnership or joint venture;

[Paragraph (e) added by section 96 of Act 30 of 1998]

(f)      ……….

[Paragraph (f) inserted by section 94 of Act 53 of 1999 and deleted by section 271 of Act 28 of 2011 effective on 1 October 2012]

(g)     any change whereby the provisions of section 27(4)(a)(iii) are no longer applicable in the case of that vendor;

[Paragraph (g) inserted by section 40 of Act 34 of 2004 and substituted by section 21 of Act 39 of 2013 effective on 1 March 2014]

(h)     any changes in the majority ownership of any company

[Paragraph (h) inserted by section 271 of Act 28 of 2011 effective on 1 October 2012]

Section 24 (VAT) – Cancellation of registration

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24. Cancellation of registration

(1)     Subject to the provisions of subsection (2), every vendor shall cease to be liable to be registered where the Commissioner is satisfied that the total value of the vendor’s taxable supplies in the period of 12 months commencing at the beginning of any tax period of the vendor will be not more than the amount referred to in section 23(1) or (1A).

[Subsection (1) substituted by section 71(1) of Act 34 of 2019 deemed effective on 1 April, 2019]

(2)     Every vendor who wishes to have his registration cancelled in the circumstances contemplated in subsection (1), may request the Commissioner in writing to cancel his registration, and if the Commissioner is satisfied as contemplated in subsection (1), the Commissioner shall cancel the vendor’s registration with effect from the last day of the tax period during which the Commissioner was so satisfied, or from such other date as may be determined by the Commissioner, and shall notify the vendor of the date on which the cancellation of the registration takes effect.

(3)     Every vendor who ceases to carry on all enterprises shall notify the Commissioner of that fact within 21 days of the date of such cessation and the Commissioner shall cancel the registration of such vendor with effect from the last day of the tax period during which all such enterprises ceased, or from such other date as may be determined by the Commissioner.

[Subsection (3) amended by section 93 of Act 53 of 1999]

(4)     Any notification by a vendor in terms of subsection (3) shall be made in writing to the Commissioner and shall state the date upon which that vendor ceased to carry on all enterprises and whether or not that vendor intends to carry on any enterprise within 12 months from that date.

(5)     Where the Commissioner is satisfied that a vendor-

(a)     no longer complies with the requirements for registration as contemplated in section 23(1) and (3) ; or

(b)     has failed to furnish the Commissioner with a return reflecting such information as may be required for the purposes of the calculation of tax in terms of section 14 or 16,

the Commissioner may cancel such vendor’s registration with effect from the last day of the tax period during which the Commissioner is so satisfied, or from such other date as may be determined by the Commissioner: Provided that where such person lodges an objection against the Commissioner’s decision under this subsection the cancellation of that person’s registration shall not take effect until such time as the Commissioner’s decision becomes final and conclusive.

[Subsection (5) substituted by section 21 of Act 20 of 1994, section 93 of Act 53 of 1999 and section 179 of Act 31 of 2013 effective on 1 April 2014]

(6)    Where any person has been registered as a vendor in consequence of an application made by him under section 23(3) and subsequent to the registration of that person as a vendor it appears to the Commissioner that such person’s registration should be cancelled by reason of any of the circumstances referred to in section 23(7), the Commissioner may cancel such person’s registration with effect from a date determined by the Commissioner: Provided that where such person lodges an objection against the Commissioner’s decision under this subsection the cancellation of that person’s registration shall not take effect until such time as the Commissioner’s decision becomes final and conclusive.

(7)     The Commissioner shall give written notice to the person concerned of his decision to cancel such person’s registration in terms of this section or of his refusal to cancel such registration.

Section 23 (VAT) – Registration of persons making supplies in the course of enterprises

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23. Registration of persons making supplies in the course of enterprises

(1)     Every person who, on or after the commencement date, carries on any enterprise and is not registered, becomes liable to be registered-

(a)     at the end of any month where the total value of taxable supplies made by that person in the period of 12 months ending at the end of that month in the course of carrying on all enterprises has exceeded R1 million;

[Paragraph (a) amended by section 92 of Act 53 of 1999 and substituted by section 113 of Act 60 of 2008 effective on 1 March 2009]

(b)     at the commencement of any month where the total value of the taxable supplies in terms of a contractual obligation in writing to be made by that person in the period of 12 months reckoned from the commencement of the said month will exceed the above-mentioned amount:

[Paragraph (b) substituted by section 178 of Act 31 of 2013 effective on 1 April 2014]

Provided that the total value of the taxable supplies of the vendor within the period of 12 months referred to in paragraph (a) or the period of 12 months referred to in paragraph (b) shall not be deemed to have exceeded or be likely to exceed the amount contemplated in paragraph (a), where the Commissioner is satisfied that the said total value will exceed or is likely to exceed such amount solely as a consequence of-

[Words preceding item (i) substituted by section 24 of Act 4 of 2008]

(i)      any cessation of, or any substantial and permanent reduction in the size or scale of, any enterprise carried on by that person; or

(ii)     the replacement of any plant or other capital asset used in any enterprise carried on by that person; or

(iii)  abnormal circumstances of a temporary nature.

[Subsection (1) amended by section 92 of Act 53 of 1999]

(1A)  Every person who carries on any enterprise as contemplated in paragraph (b)(vi) or (vii) of the definition of “enterprise” in section 1 and is not registered becomes liable to be registered at the end of any month where the total value of taxable supplies made by that person has exceeded R1 million in any consecutive 12-month period: Provided that such person shall not be liable to register where the said total value of taxable supplies made by that person has exceeded R1 million in any consecutive 12-month period solely as a consequence of abnormal circumstances of a temporary nature.

[Subsection (1A) inserted by section 178(1)(b) of Act 31 of 2013 and substituted by section 11(1) of Act 21 of 2018 and by section 24 of Act 16 of 2022]

(2)     Every person who is not a resident of the Republic, and who in terms of subsection (1), (1A) or section 50A, becomes liable to be registered in accordance with Chapter 3 of the Tax Administration Act, shall be deemed not to have applied for registration, in addition to section 22(4) of the Tax Administration Act, until such person has—

(a)     appointed a representative vendor as contemplated in section 46 and furnished the Commissioner with the particulars of such representative vendor;

(b)     opened a banking account with any bank, mutual bank or other similar institution, registered in terms of the Banks Act, 1990 (Act 94 of 1990), for the purposes of his or her enterprise carried on in the Republic and furnished the Commissioner with the particulars of such banking account:

Provided that, if the person is resident in a country that the Republic has an agreement in force with under section 108(2) of the Income Tax Act or section 75(2), paragraph (b) shall not apply-

(i)      in the case of a company that-

(aa)   is an ‘external company’ as defined in section 1 of the Companies Act, 2008 (Act 71 of 2008); and

(bb)   does not have a fixed or permanent place in the Republic relating to such enterprise contemplated in subsection (1), (1A) or section 50A;

(ii)     in the case of a natural person that is physically present in the Republic less than an accumulated period of six months in any period of 12 months; or

(iii)    in the case of any person that is an enterprise solely as a result of paragraph (b)(vi) of the definition of ‘enterprise’ in section 1.

[Subsection (2) substituted by section 37 of Act 27 of 1997, amended by section 113(1)(b) of Act 60 of 2008 and by section 37(1)(a) of Act 18 of 2009 and substituted by section 271 read with paragraph 117(a) of Schedule 1 of Act 28 of 2011 and by section 11(a) of Act 43 of 2024]

(2A)

(a)     Notwithstanding subsection (2), every person who is not a resident of the Republic and who in terms of subsection (1) or section 50A becomes liable to be registered in accordance with Chapter 3 of the Tax Administration Act, may be registered by the Commissioner as a branch of a registered vendor upon written application for a branch registration by that registered vendor: Provided that-

(i)      such resident vendor and a person who is not a resident forms part of the same “group of companies” as defined in section 1 of the Income Tax Act;

(ii)     where there is more than one holding company or subsidiary that is not a resident of the Republic, all those holding companies or subsidiaries may register under the same branch registration and will be deemed to constitute a single branch;

(iii)    the branch shall be treated as a separate person from the main registered vendor for the purposes of this Act;

(iv)    for the purposes of supplies made in the Republic between persons within the same branch registration, such supplies and acquisitions must be accounted for in that branch registration;

(v)     the Commissioner may effective on a date determined by the Commissioner, cancel the branch registration contemplated herein if-

(aa)   the main registered vendor has applied to the Commissioner in writing for such registration to be cancelled; or

(bb)   it appears to the Commissioner that the duties or obligations of such branch have not been satisfactorily performed or carried out,

and thereafter any activity carried on by such person who was part of the branch registration shall as from the said date, be deemed to be carried on separately by each person who is a non-resident;

(vi)    the Commissioner shall cancel the branch registration on the cancellation of the registration of the main registered vendor referred to herein and thereafter any activity carried on by such person that was part of the branch registration shall, as from the said date, be deemed to be carried on separately by each person who is a non-resident;

(vii)   where any person registered under such branch fails to do anything required to be done under this Act, the liability for the doing of that thing shall revert to the main registered vendor referred to herein;

(viii)   any decision or determination of the Commissioner made under section 15 or 27 in respect of the main registered vendor referred to herein shall, for the purposes of this Act, apply equally to the branch: Provided further that where a decision or determination is made by the Commissioner under section 27(2) which applies in respect of any such branch, this paragraph shall not be construed as preventing the Commissioner from making a separate decision or determination under section 27(4) in the circumstances contemplated in that subsection in respect of any other branch of the said main registered vendor; and

(ix)    notwithstanding the provisions of this section, any amount that is refundable under section 190 of the Tax Administration Act (including interest thereon) to the main registered vendor referred to herein or the branch may be set off against the outstanding tax debt of the main registered vendor referred to herein or the branch, as the case may be.

(b)     For the purposes of this Act, where a decision is made under this section, the main registered vendor and each person who is a non-resident falling under the branch registration shall be held jointly and severally liable for any tax due by such branch.

(c)     Where any person who is a non-resident elects and applies to register as a VAT vendor independently and not as part of the branch registration, the provisions of this section shall not apply to such person.

[Subsection (2A) added by section 32(1) of Act 20 of 2022 effective on 1 January, 2023]

(2B)  Every person who is not a resident of the Republic and who no longer complies with the requirements of the proviso to subsection (2), is required to comply with the requirements under subsection (2)(b) and section 46(1).

[Subsection (2B) inserted by section 11(b) of Act 43 of 2024]

(3)     Notwithstanding the provisions of subsections (1) and (2), every person who satisfies the Commissioner that, on or after the commencement date-

(a)     that person is a ‘municipality’ as defined in section 1 or is carrying on any enterprise as contemplated in paragraph (b)(ii), (iii) or (v) of the definition of ‘enterprise’ in section 1; or

[Paragraph (a) substituted by section 36 of Act 32 of 2005 and section 14 of Act 10 of 2006]

(b)     that person-

(i)      is carrying on any enterprise and the total value of taxable supplies made by that person in the course of carrying on all enterprises in the preceding period of 12 months has exceeded R50 000; or

(ii)     subject to the provisions of section 15(2B) and any regulation made by the Minister in terms of this Act, is carrying on any enterprise where the total value of taxable supplies made or to be made by that person has not exceeded R50 000 but can reasonably be expected to exceed that amount within 12 months from the date of registration,

other than any enterprise-

(AA)  as contemplated in paragraph (b)(ii) or (iii) of the definition of ‘enterprise’ in section 1; or

(BB)  that is a ‘municipality’ as defined in section 1;

 [Paragraph (b) substituted by section 14 of Act 10 of 2006, amended by section 93 of Act 17 of 2009 and substituted by section 178 of Act 31 of 2013 effective on 1 April 2014]

(c)     that person intends to carry on any enterprise from a specified date, where that enterprise will be supplied to him as a going concern and the total value of taxable supplies made by the supplier of the going concern from carrying on that enterprise or part of the enterprise which will be supplied has exceeded R50 000 in the preceding period of 12 months; or

[Paragraph (c) substituted by section 93 of Act 17 of 2009 effective on 1 March 2010]

(d)     that person is continuously and regularly carrying on an activity of a nature set out in any regulation made by the Minister in terms of this Act and in consequence of the nature of that activity is likely to make taxable supplies only after a period of time,

[Paragraph (d) substituted by section 93 of Act 17 of 2009 effective on 1 March 2010 and section 178 of Act 31 of 2013 effective on 1 April 2014]

may apply to the Commissioner in the approved form for registration.

[Words following paragraph (d) substituted by section 271 of Act 28 of 2011 effective on 1 October 20112]

[Subsection (3) substituted by section 92 of Act 53 of 1999]

(4)     Where any person has-

(a)     applied for registration in accordance with Chapter 3 of the Tax Administration Act or subsection (2) or (3) and the Commissioner is satisfied that that person is eligible to be registered in terms of this Act, that person shall be a vendor for the purposes of this Act with effect from such date as the Commissioner may determine; or

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

(b)     not applied for registration in terms of Chapter 3 of the Tax Administration Act and the Commissioner is satisfied that that person is liable to be registered in terms of this Act, that person shall be a vendor for the purposes of this Act with effect from the date on which that person first became liable to be registered in terms of this Act: Provided that the Commissioner may, having regard to the circumstances of the case, determine that person to be a vendor from such later date as the Commissioner may consider equitable:

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

Provided that where that person is a public entity listed in Schedule 1 or Part A or C of Schedule 3 to the Public Finance Management Act, 1999 (Act No. 1 of 1999), which was liable to be registered as a vendor for any supplies made on or before 31 March 2005, but did not register before 1 April 2005, the Commissioner must not register that person in respect of those supplies.

[Proviso inserted by section 9 of Act 10 of 2005]

(5)     Notwithstanding anything in this Act to the contrary, where any enterprise is carried on by any association not for gain in branches or divisions, or separate enterprises are carried on by that association, that association may apply in writing to the Commissioner for any such branch, division or separate enterprise to be deemed to be a separate person for the purposes of this section, and if every such branch, division or separate enterprise maintains an independent system of accounting and can be separately identified by reference to the nature of the activities carried on or the location of that branch, division or separate enterprise, every such branch, division or separate enterprise shall be deemed to be a separate person, and not a part of the association, and, where any such branch, division or separate enterprise is deemed to be a separate person under this subsection, any enterprise carried on by that branch or division or any separate enterprise carried on by the association shall, to that extent, be deemed not to be carried on by the association concerned.

(6)     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 section, but no regard shall be had to any tax charged in respect of any such supply: Provided that any supply of services contemplated in section 11(2) (n) shall for the purposes of this section be deemed not to be a taxable supply.

(7)     Where the Commissioner is satisfied that any person who has applied for registration in terms of subsection (3) is not eligible to be registered in terms of this Act or should not be registered by reason of the fact that such person-

(a)     has no fixed place of abode or business; or

(b)     does not keep proper accounting records relating to any enterprise carried on by him; or

(c)     has not opened a banking account with any bank, mutual bank or other similar institution for the purposes of any enterprise carried on by him; or

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

(d)     has previously been registered as a vendor in respect of any enterprise, whether in terms of this Act or in terms of the Sales Tax Act, 1978 (Act No. 103 of 1978), but failed to perform his duties under either of the said Acts in relation to such enterprise,

the Commissioner may refuse to register the said person as a vendor in terms of this Act and shall give written notice to that person of such refusal.

Section 22 (VAT) – Irrecoverable debts

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22. Irrecoverable debts

(1)     Subject to subsection (6), where a vendor-

[Words preceding paragraph (a) substituted by section 140 of Act 24 of 2011 with effect from 10 January 2012]

(a)     has made a taxable supply for consideration in money; and

(b)     has furnished a return in respect of the tax period for which the output tax on the supply was payable and has properly accounted for the output tax on that supply as required under this Act; and

(c)     has written off so much of the said consideration as has become irrecoverable,

the vendor may make a deduction in terms of section 16(3) of that portion of the amount of tax charged in relation to that supply as bears to the full amount of such tax the same ratio as the amount of consideration so written off as irrecoverable bears to the total consideration for the supply, the deduction so made being deemed for the purposes of the said section to be input tax:

Provided that-

(i)      where tax charged in respect of a supply of goods under an instalment credit agreement has become irrecoverable, any deduction in terms of section 16(3) as provided for in this section, shall be restricted to the tax content of the amount which has become irrecoverable in respect of the cash value of such supply, as applicable in respect of that agreement in terms of section 10(6);

(ii)     the amount which has become irrecoverable in respect of such cash value shall be deemed to be an amount equal to the balance of the cash value remaining after deducting therefrom so much of the sum of the payments made by the debtor in terms of 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;

(iii)    the said tax content shall be an amount calculated by applying the tax fraction, as applicable at the time the supply under the said instalment credit agreement was in terms of section 9(3)(c) deemed to have taken place, to the amount deemed as aforesaid to be irrecoverable in respect of such cash value;

[Paragraph (iii) substituted by section 27 of Act 136 of 1992]

(iv)  a vendor who has transferred an account receivable at face value on a-

(aa)   non-recourse basis to any other person, shall not make any deduction in respect of such transfer in terms of this subsection; or

(bb)   recourse basis to any other person, may make a deduction in terms of this subsection only when such account receivable is transferred back to him and he has written off so much of the consideration as has become irrecoverable:

[Paragraph (iv) added by section 36 of Act 27 of 1997]

Provided further that the deduction provided for in this subsection shall not be made in terms of section 16(3)-

(i)      in respect of any amount which has become irrecoverable in respect of an instalment credit agreement, if the vendor has repossessed or is obliged to take possession of the goods supplied in terms of that agreement; or

[Paragraph (i) substituted by section 177 of Act 31 of 2013 effective on 1 April 2014]

(ii)     in the case of any vendor who is required to account for tax payable on a payments basis in terms of section 15, except in relation to any supply made by him to which section 9(2)(b) or section 9(3)(c) applies.

[Subsection (1) amended by section 33 of Act 136 of 1991]

(1A) Where a vendor-

(a)     has made a taxable supply for consideration in money; and

(b)     has furnished a return in respect of the tax period for which the output tax on the supply was payable (at the rate of tax referred to in section 7(1)) and has properly accounted for the output tax on that supply as required in terms of this Act; and

(c)     has transferred the account receivable relating to such taxable supply at face value to another vendor (hereinafter referred to as the recipient) on a non-recourse basis on or after the date of promulgation of the Taxation Laws Amendment Act, 1997,

and any amount of the face value (excluding any amount of finance charges or collection costs) of such account receivable has been written off as irrecoverable by such recipient, such recipient may make a deduction in terms of section 16(3) of an amount equal to the tax fraction (being the tax fraction applicable at the time such taxable supply is deemed to have been made) of such face value (limited to the amount paid by the recipient in respect of such face value) written off by him, the deduction so made being deemed for the purposes of the said section to be input tax.

[Subsection (1A) inserted by section 36 of Act 27 of 1997]

(2)     Where any amount in respect of which a deduction has been made in accordance with subsection (1) or (1A) is at any time wholly or partly recovered by the vendor, or becomes recoverable by him by virtue of the reassignment to him of the underlying debt, that portion of the amount of such deduction as bears to the full amount of such deduction the same ratio as the amount of the irrecoverable debt recovered or reassigned bears to the debt written off shall be deemed to be tax charged in relation to a taxable supply made during the tax period in which the debt is wholly or partly recovered or assigned to such vendor.

[Subsection (2) substituted by section 27(b) of Act 136 of 1992 and by section 49(1) of Act 42 of 2024 effective on 1 April, 2025]

(3)     Subject to subsection (3A), where a vendor who is required to account for tax payable on an invoice basis in terms of section 15–

[Words preceding paragraph (a) substituted by section 140 of Act 24 of 2011 with effect from 10 January 2012]

(a)     has made a deduction of input tax in terms of section 16(3) in respect of a taxable supply of goods or services made to him; and

(b)     has, within a period of 12 months after the expiry of the tax period within which such deduction was made, not paid the full consideration in respect of such supply,

[Paragraph (b) substituted by section 95 of Act 30 of 1998]

an amount equal to the tax fraction, as applicable at the time of such deduction, of that portion of the consideration which has not been paid shall be deemed to be tax charged in respect of a taxable supply made in the tax period following the expiry of the period of 12 months: Provided that-

(i)      the period of 12 months shall, if any contract in writing in terms of which such supply was made provides for the payment of consideration or any portion thereof to take place after the expiry of the tax period within which such deduction was made, in respect of such consideration or portion be calculated as from the end of the month within which such consideration or portion was payable in terms of that contract;

[Subparagraph (ii) amended by section 86 of Act 20 of 2006]

(ii)     where-

(aa)   the estate of a vendor is sequestrated, whether voluntarily or compulsorily;

(bb)   the vendor is declared insolvent;

(cc)    the vendor has entered into a compromise in terms of section 155 of the Companies Act, 2008 (Act No. 71 of 2008), or a similar arrangement with creditors; or

[Subparagraph (cc) substituted by section 177 of Act 31 of 2013 effective on 1 April 2014]

(dd)   the vendor ceases to be a vendor as contemplated in section 8(2),

within 12 months after the expiry of the tax period within which that deduction was made, not paid the full consideration, the vendor must account for output tax in terms of this section equal to the tax fraction at the rate applicable at the time of such deduction of that portion of the consideration which has not been paid—

(AA) at the time of sequestration, declaration of insolvency or the date on which the compromise or the arrangement or similar arrangement was entered into; or

(BB)  immediately before the vendor ceased to be a vendor as contemplated in section 8(2); or

[Paragraph (ii) substituted by section 86(c) of Act 20 of 2006 and amended by section 66(1) of Act 23 of 2020 effective on 1 April, 2021]

(iii)    paragraph (ii) shall not be applicable where a vendor has already accounted for tax payable in accordance with this subsection

[Subparagraph (iii) inserted by section 86 of Act 20 of 2006 and substituted by section 140 of Act 24 of 2011 with effect from 10 January 2012]

[Subsection (3) added by section 25 of Act 37 of 1996 and amended by section 36 of Act 27 of 1997, section 110 of Act 31 of 2005 and section 86 of Act 20 of 2006]

(3A)  Subject to subsection (6)(a), subsection (3) shall not be applicable in respect of a taxable supply made by a vendor which is a member of a group of companies, to another vendor which is a member of the same group of companies for as long as both vendors are members of the same group of companies.

[Subsection (3A) inserted by section 140 of Act 24 of 2011 with effect from 10 January 2012]

(4)     If a vendor who has accounted for tax payable in accordance with subsection (3) at any time thereafter pays any portion of the consideration in respect of the supply in question, he may in terms of section 16(3) make a deduction of input tax of an amount equal to the tax fraction, as applicable at the time of the deduction contemplated in paragraph (a) of the said subsection (3), of that portion of the consideration so paid.

[Subsection (4) added by section 25 of Act 37 of 1996]

(5)     ……….

[Subsection (5) added by section 25 of Act 37 of 1996 and deleted by section 177 of Act 45 of 2003]

(6)

(a)     Where a vendor which is a member of a group of companies makes a taxable supply to another vendor which is a member of the same group of companies, the vendor who made the taxable supply may not make a deduction in terms of subsection (1) read with section 16(3) of any amount of tax that has become irrecoverable for as long as both vendors are members of the same group of companies.

(b)     For the purposes of paragraph (a) and subsection (3A), a ‘group of companies’ means a group of companies as defined in section 1 of the Income Tax Act if any other company would be part of the same group of companies as that company if the expression ‘at least 70 per cent of the equity shares of’ in paragraphs (a) and (b) of that definition were replaced by the expression ‘100 per cent of the equity shares of.

[Subsection (6) added by section 140 of Act 24 of 2011 with effect from 10 January 2012]

(7)     For purposes of this section, “face value” means the amount of the account receivable at the time of transfer less the amount written off by the seller, after adjustments have been made for debit and credit notes and amounts already written off as irrecoverable by the vendor.

[Subsection (7) added by section 91(1) of Act 23 of 2018 effective on 1 April, 2019]

Section 21 (VAT) – Credit and debit notes

Posted on by admin_kmos

21. Credit and debit notes

 

(1)     This section shall apply where, in relation to the supply of goods or services by any registered vendor-

 

(a)     that supply has been cancelled; or

 

(b)     the nature of that supply has been fundamentally varied or altered; or

 

(c)     the previously agreed consideration for that supply has been altered by agreement with the recipient, whether due to the offer of a discount or for any other reason; or

 

(d)     the goods or services or part of the goods or services supplied have been returned to the supplier, including the return to—

 

(i)      a vendor of a returnable container, the vendor in such case being deemed for the purposes of this Act to have made the supply of the container in respect of which the deposit was charged, whether the supply was made by him or any other person; or

 

(ii)     a vendor, where a supply of an enterprise as a going concern, contemplated in section 11(1)(e) or section 8(25) of this Act, was made to that vendor, the vendor in such case being deemed for purposes of this Act to have made the supply of the goods or services to the recipient, whether the supply was made by him or the other vendor that made the supply of that enterprise as a going concern;

[Paragraph (d) substituted by section 26(1)(a) of Act 136 of 1992, amended by section 150(1)(a) of Act 22 of 2012 and substituted by section 8 of Act 22 of 2018. Subparagraph (ii) substituted by section 44(1) of Act 5 of 2026 effective on 1 April, 2026]

 

(e)     an error has occurred in stipulating the amount of consideration agreed upon for that supply; or

[Paragraph (e) added by section 150(1)(b) of Act 22 of 2012 and substituted by section 51(1)(a) of Act 17 of 2023 effective on 1 April, 2024]

 

(f)      prepaid vouchers contemplated in section 10(19) have been issued by any registered vendor that is an “electronic communications service licensee” as defined in section 1 of the Electronic Communications Act, 2005 (Act 36 of 2005), and the nature of the supply specified on such voucher has been fundamentally varied or altered,

[Paragraph (f) added by section 51(1)(b) of Act 17 of 2023 effective on 1 April, 2024]

 

and the supplier has-

 

(i)      provided a tax invoice in relation to that supply and the amount shown therein as tax charged on that supply is incorrect in relation to the amount properly chargeable on that supply as a result of the occurrence of any one or more of the above-mentioned events; or

 

(ii)     furnished a return in relation to the tax period in respect of which output tax on that supply is attributable, and has accounted for an incorrect amount of output tax on that supply in relation to the amount properly chargeable on that supply as a result of the occurrence of any one or more of the above-mentioned events.

 

(2)     Where a supplier has accounted for an incorrect amount of output tax as contemplated in subsection (1), that supplier shall make an adjustment in calculating the tax payable by the supplier in the return for the tax period during which it has become apparent that the output tax is incorrect, and if-

 

(a)     the output tax properly chargeable in relation to that supply exceeds the output tax actually accounted for by the supplier, the amount of that excess shall be deemed to be tax charged by that supplier in relation to a taxable supply attributable to the tax period in which the adjustment is to be made, and shall not be attributable to any prior tax period; or

 

(b)     the output tax actually accounted for exceeds the output tax properly chargeable in relation to that supply, that supplier shall either make a deduction in terms of section 16(3) in respect of the amount of that excess (such amount being deemed for the purposes of that section to be input tax), or reduce the amount of output tax attributable to the said tax period in terms of section 16 (4) by the amount of that excess: Provided that the said deduction shall not be made where the excess tax has been borne by a recipient of goods or services supplied by the supplier and the recipient is not a vendor, unless the amount of the excess tax has been repaid by the supplier to the recipient, whether in cash or by way of a credit against any amount owing to the supplier by the recipient.

[Paragraph (b) amended by section 34 of Act 97 of 1993]

 

(3)     Subject to this section, where a tax invoice has been provided as contemplated in subsection (1) (i), and-

 

(a)     the amount shown as tax charged in that tax invoice exceeds the actual tax charged in respect of the supply concerned, the supplier shall provide the recipient with a credit note, containing the following particulars:

 

(i)      the words “credit note”;

[Subparagraph (i) substituted by section 27 of Act 23 of 2015 effective on 8 January 2016]

 

(ii)      the name, address and VAT registration number of the vendor;

[Subparagraph (ii) substituted by section 48 of Act 16 of 2004]

 

(iii)    the name, address and, where the recipient is a registered vendor, the VAT registration number of the recipient, except where the credit note relates to a supply in respect of which a tax invoice contemplated in section 20(5) was issued;

[Subparagraph (iii) substituted by section 26 of Act 136 of 1992, section 176 of Act 45 of 2003 and section 48 of Act 16 of 2004]

 

(iv)  the date on which the credit note was issued;

 

(v)   either-

 

(aa)   the amount by which the value of the said supply shown on the tax invoice has been reduced and the amount of the excess tax; or

 

(bb)   where the tax charged in respect of the supply is calculated by applying the tax fraction to the consideration, the amount by which the consideration has been reduced and either the amount of the excess tax or a statement that the reduction includes an amount of tax and the rate of the tax included;

[Subparagraph (v) substituted by section 26 of Act 136 of 1992]

 

(vi)    a brief explanation of the circumstances giving rise to the issuing of the credit note;

 

(vii)   information sufficient to identify the transaction to which the credit note refers;

 

 

(b)     the actual tax charged in respect of the supply concerned exceeds the tax shown in the tax invoice as charged, the supplier shall provide the recipient with a debit note, containing the following particulars:

 

(i)     the words “debit note”;

[Subparagraph (i) substituted by section 27 of Act 23 of 2015 effective on 8 January 2016]

 

(ii)     the name, address and VAT registration number of the vendor;

[Subparagraph (ii) substituted by section 48 of Act 16 of 2004]

 

(iii)    the name, address and, where the recipient is a registered vendor, the VAT registration number of the recipient, except where the debit note relates to a supply of goods in respect of which a tax invoice contemplated in section 20(5) was issued.

[Subparagraph (iii) substituted by section 26 of Act 136 of 1992, section 176 of Act 45 of 2003 and section 48 of Act 16 of 2004]

 

(iv)  the date on which the debit note was issued;

 

(v)     either-

 

(aa)   the amount by which the value of the said supply shown on the tax invoice has been increased and the amount of the additional tax; or

 

(bb)   where the tax charged in respect of the supply is calculated by applying the tax fraction to the consideration, the amount by which the consideration has been increased and either the amount of the additional tax or a statement that the increase includes an amount of tax and the rate of the tax included;

[Subparagraph (v) substituted by section 26 of Act 136 of 1992]

 

(vi)    a brief explanation of the circumstances giving rise to the issuing of the debit note;

 

(vii)   information sufficient to identify the transaction to which the debit note refers:

 

Provided that-

 

(A)    it shall not be lawful to issue more than one credit note or debit note for the amount of the excess;

 

(B)    if any registered vendor claims to have lost the original credit note or debit note, the supplier or recipient, as the case may be, may provide a copy clearly marked “copy”;

 

(C)    a supplier shall not be required to provide a recipient with a credit note contemplated in paragraph (a) of this subsection in any case where and to the extent that the amount of the excess referred to in that paragraph arises as a result of the recipient taking up a prompt payment discount offered by the supplier, if the terms of the prompt payment discount offer are clearly stated on the face of the tax invoice.

 

(4)     Where a recipient, being a registered vendor, creates a document containing the particulars specified in this section and purporting to be a credit note or a debit note in respect of a supply of goods or services made to the recipient by a supplier, being a registered vendor, the document shall be deemed to be a credit note or, as the case may be, a debit note provided by the supplier under subsection (3) where-

 

(a)     the Commissioner has granted prior approval for the issue of such documents by a recipient or recipients of a specified class in relation to the supplies or supplies of a specified category to which the documents relate; and

 

(b)     the supplier and the recipient agree that the supplier shall not issue a credit note or, as the case may be, a debit note in respect of any supply to which this subsection applies; and

 

(c)     a copy of any such document is provided to the supplier and another copy is retained by the recipient:

 

Provided that-

 

(i)      where a credit note is issued in accordance with this subsection, any credit note issued by the supplier in respect of that supply shall be deemed not to be a credit note for the purposes of this Act;

 

(ii)   where a debit note is issued in accordance with this subsection, any debit note issued by the supplier in respect of that supply shall be deemed not to be a debit note for the purposes of this Act.

 

(5)     Where the Commissioner is satisfied that there are or will be sufficient records available to establish the particulars of any supply or category of supplies and that it would be impractical to require that a full credit note or debit note be issued in terms of this section, the Commissioner may, subject to any conditions that the Commissioner may consider necessary, direct-

 

(a)     that any one or more of the particulars specified in paragraph (a) or, as the case may be, paragraph (b) of subsection (3) shall not be contained in a credit note or, as the case may be, a debit note; or

 

(b)     that a credit note or, as the case may be, a debit note is not required to be issued.

 

(6)     Where any recipient, being a registered vendor, has been issued with a credit note in terms of subsection (3)(a), or has written or other notice or otherwise knows that any tax invoice which the vendor holds is incorrect as a result of any one or more of the events specified in any of paragraphs (a), (b), (c), (d) or (e) of subsection (1) and has made a deduction of any amount of input tax in any tax period in respect of the supply of goods or services to which the credit note or that notice or other knowledge, as the case may be, relates, either the amount of the excess referred to in subsection (3)(a) shall be deemed to be tax charged in relation to a taxable supply made by the recipient attributable to the tax period in which the credit note was issued, or that notice or, as the case may be, other knowledge was received, or the amount of input tax deducted in terms of section 16(3) in the last-mentioned tax period shall be reduced by the amount of the said excess, to the extent that the input tax deducted in the first-mentioned tax period exceeds the output tax properly charged.

[Subsection (6) substituted by section 34 of Act 97 of 1993 and section 136 of Act 25 of 2015 effective on 1 April 2016]

 

(7)     Where any recipient, being a registered vendor, has been issued with a debit note in terms of subsection (3) (b) and has made a deduction of any amount of input tax in any tax period in respect of the supply of goods or services to which that debit note relates, the recipient may, subject to the provisions of section 17, make a deduction of input tax in terms of section 16(3) in respect of the amount of the excess referred to in subsection (3) (b) in the tax period in which the debit note is issued, to the extent that the output tax properly charged exceeds the input tax deducted.

 

(8)     Notwithstanding anything to the contrary in subsection (3), where a vendor acquires an enterprise from another vendor and as a result of that acquisition, the supplying vendor immediately ceases to be a vendor, and the purchasing vendor, within a period of six months from the date of acquisition, issues or receives a credit note or debit note, as the case may be, in respect of the acquired enterprise, that credit note or debit note may reflect the name, address and VAT registration number of the supplying vendor.

[Subsection (8) added by section 36 of Act 18 of 2009]