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New VAT Changes You Ought To know About

Tuesday, 22 December 2009   (0 Comments)
Posted by: TaxFind™
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New VAT Changes You Ought To know About

Including ‘interesting’ changes to the payment of interest …

VAT relief where the Income Tax reorganisation roll over provisions are applied—effective  30 September 2009 Section 8(25) of the VAT Act contains relief measures for transactions that fall into the ambit of the Income Tax reorganisation rollover provisions (i.e. Sections 42, 44, 45 or 47 of the Income Tax Act). This VAT relief effectively deems the seller and the buyer to be one and the same person. The effect is that a reorganisation for VAT purposes is deemed to be a non-event transactions—effective 30 September 2009.

The new amendment provides a transitional arrangement for vendors who have acquired a business from a supplying vendor that has subsequently deregistered as a vendor. In this regard, a tax invoice, debit or credit note may be issued or received bearing the name, address and VAT number of the seller for a period of 6 months from the date of the transaction.

This means the tax invoice, debit or credit note may reflect the name, address and VAT registration number of the supplying vendor. This transitional arrangement allows vendors to comply with the documentary requirements of the VAT Act.

Payment of interest on a disputed amount—effective date to be determined by the Minister Prior to this amendment the VAT Act did not require SARS to pay interest on the over payment of tax when a taxpayer is required to pay a disputed amount while the amount is subject to objection in circumstances where the objection is subsequently allowed.

According to the explanatory memorandum, the non-payment of interest in these circumstances is arguably contrary to one of the core principles on which the constitutionality of the "pay now argue later”' principle is based. The new amendment provides for the following:
• clarifies that payment is not suspended due to objection,
• formalises the circumstances where payment will be required despite objection, and
• provides for interest where a payment is made pending consideration of an objection that is ultimately allowed.

The introduction of biometric testing
SARS has introduced enabling provisions into the Act which will permit the use of biometric information to verify the identity of applicants for VAT registration. Biometric information has been defined in the Act as follows: ‘biometrical information’ means the biological data to authenticate the identity of a natural person, and includes -
(a) facial recognition;
(b) fingerprint recognition;
(c) vocal recognition; and
(d) iris or retina recognition.''

Minimum registration turnover threshold—effective 1 March 2010.

The minimum VAT registration turnover threshold will increase from R20 000 to R50 000 per annum with effect from 1 March 2010.

SARS re-writing Customs & Excise Act
SARS has re-written the current Customs & Excise Act, 1964. The main aims are firstly to bring South Africa in line with international protocols and its commitments at the WCO, and secondly it is a very old piece of legislation ("draconian in parts”) and has battled to keep pace with technological developments mainly around electronic communication, so a lot of the changes are to help modernise the way Customs engages with businesses.

The first phase of this re-write was the publication of two draft Customs Bills last Friday for public comment before 26 February 2010.There is a Customs Control Bill and a Customs Duty Bill. SARS has have effectively split the Excise part into a separate Act, and this draft Bill as well as the draft regulations for both new Acts will be published in 2010 for comment.

SARS is aiming to table the new Customs Bills in parliament in April 2010.

Source: By Deloitte Tax Department (Taxbreaks)



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