FAQ - 8 June 2016
08 June 2016
Posted by: Author: SAIT Technical
Author: SAIT Technical
1. Can VAT be claimed on
Q: The Client A went into build contract with B (builder) to build
a residential house for R 1 000 000. A is non VAT vendor and B is VAT
registered. The 1 000 0000 was paid to B to purchases the building material and
do the construction of the property. A requested that B must claim VAT on the
purchases for building material and pay it over to A is this correct?
A: You state that Client A is not a vendor
and also that it relates to a supply of services relevant to a residential
property. It is not clear what the agreement is with respect to the
"building material”, but it may not make a difference. Even where the
vendor (B) is not acting in the capacity of an agent, Client A will not be able
to make a deduction (as Client A is not a vendor).
would only have input tax (and be able to make a deduction) if he acted as the
principal. An output tax would then be included in the consideration
agreed on in the building contract.
not sure why Client A believes that the supplier must pay amounts to the
recipient. It doesn’t appear that there is an agreement to reduce the
agreed upon consideration. There would also not be a supply by Client A
to vendor B.
2. Is VAT charged on
supplies made on a flight?
Q: Will it be standard or zero rated if you are invoicing an
international company that supplies newspapers all over the world to airlines.
The newspapers are consumed locally and have therefore always charged VAT. I am
specifically talking about papers that are consumed inflight.
A: In terms of the relevant part of the
definition in section 1(1), "exported”, in relation to any movable goods
supplied by any vendor under a sale or an instalment credit agreement, means
"delivered by the vendor to … a foreign-going aircraft when such ship or
aircraft is going to a destination in an export country and such goods are for
use or consumption in such … aircraft…”
delivery to the "catering companies” may well be an instance (as in your view)
where the "vendor may only elect to levy tax at the zero rate where the vendor
ensures that the movable goods are delivered (irrespective of the contractual
conditions of delivery) to any of the … airports listed in the definition of
"designated commercial port" from where the movable goods are to be
exported by the qualifying purchaser.” In other words, it is not exported
as required by section 11(a) (i).
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.