FAQ - 3 June 2015
03 June 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
1. How does an exporter claim back VAT in terms of the new agreement with Swaziland?
Q: Regarding Notice 270 published by SARS relating to the mutual agreement between South Africa and Swaziland, my question is as follows:
• Is this agreement already in effect?
• Our clients zero rate vat on exports if they themselves deliver the goods to Swaziland or pay for the transport of the goods by a courier company. Do they now have to charge 14% VAT as a result of this agreement between the two governments?
• Where an indirect export takes place, where does the customer claim back the VAT (at the border post or from the Swaziland revenue authority)?
A: Effective date of the agreement
The Notice that you refer to (number 270) specifically states that, in terms of paragraph 1 of Article 8 of the Agreement, the date of entry into force is 27 January 2015. The Mutual Assistance agreement does not provide for the refund or the levying of the tax. It does however refer to the appointment of Claims and Refund Manager.
We are not sure why you say that "we now have to charge 14% VAT”. If the goods exported are removed from the RSA by the recipient (or the recipient’s agent) to an export country (Swaziland) and the vendor didn’t elect to levy tax at the zero rate, the recipient can claim the tax paid back from the refund administrator. Section A of Part 2 of the Regulations (number 316) issued in Government Gazette No. 37580, 2 May 2014, deals with this.
The refund of tax is dealt with in Part One of the Regulations and the claim will be made at the border post and not from the Swaziland Revenue authority. We submit that the VAT refund administrator at the border is in fact the Claims and Refund Manager.
2. When is the time of supply for the sale of commercial property?
Q: Is there anything in the VAT Act that allows for the payment of VAT on a commercial property transaction when the money is received rather than when the property is transferred (other than the sale of a going concern which is of course zero rated)?
A: We submit that the Value-Added Tax Act actually provides that the output (and input) tax on the supply of fixed property is only accounted for when ‘paid’.
Where the time of supply of goods consisting of fixed property or any real right therein are supplied under a sale, that supply is deemed to take place:
• where registration of transfer of the goods is effected in a deeds registry, on the date of such registration; or
• on the date on which any payment is made in respect of the consideration for such supply,
whichever date is earlier.
This is in terms of section 9(3)(d).
However, section 16(3)(iiA) provides that, in respect of a vendor accounting for the tax on the invoice basis apply and where the supply is not to a connected person, the vendor must only account for the output tax "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”. This effectively is the same as a person accounting for the tax on the payments basis.
The VAT Act therefore allows for the output tax to be accounted for when the money is received. We haven’t dealt with a deposit as it was not required.
3. Can you request the DTI to pay your grant over to SARS?
Q: We have a client that owes SARS a lot of money. They are in the process of receiving a large grant from the DTI. We would like the DTI to pay this grant directly to SARS to cover the monies outstanding. How would we be able to cede this grant to SARS?
A: The request relating to the procedure to be followed to cede the amount to SARS may require legal assistance. To the best of our knowledge there is nothing preventing the taxpayer from requesting the DTI to pay the amount directly to SARS.
The Tax Administration Act, in Part D of Chapter 11, allows for the collection of tax debt from third parties. Section 179(1) specifically provides that "a senior SARS official may by notice to a person who holds or owes or will hold or owe any money… for or to a taxpayer, require the person to pay the money to SARS in satisfaction of the taxpayer's outstanding tax debt.”
It may therefore be easier to merely request SARS, their debt collection department, to issue such a notice to the DTI.
Disclaimer: Nothing in these queries and answers should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answers, SAIT do not accept any responsibility for consequences of decisions taken based on these queries and answers. It remains your own responsibility to consult the relevant primary resources when taking a decision.