Value added tax vat in south africa vat was introduced in south africa in 1991 to replace gst. Introduction vat was introduced in south africa in 1991 to replace gst. Vat is an indirect tax based on consumption of goods and services in the economy. Cliffe dekker hofmeyr out with the old and in with the. Vat 1237 as yet unreported, the durban tax court had to deal with the uncommon situation, where a legislative amendment had a significant impact on a taxpayers affairs.
The print subscription includes a free mobile version as well as updates for 12 months print and mobile. Valueadded tax vat was introduced in south africa on 29th september 1991 to replace gst general sales tax as an indirect system of taxation. Essential information regarding vat as it applies in south africa. The south african valueadded tax act makes allowance for exemptions, exceptions, deductions and adjustments that effectively lower the vat. I will present myself or authorise my regist ered tax practitioner to present this application in person to sars for validation of information. These businesses become vendors that act as the agent for government in collecting. Subject to the exemptions, exceptions, deductions and adjustments provided for in this act, there shall be levied and paid for the benefit of the national revenue fund a tax, to.
Aligning provisions of the vat act with the insurance act. Amended by rates and monetary amounts and amendment of revenue laws act 14 of 2017 by 14 dec 2017. Currently the south african vat act or the eservices regulation does not make any specific provisions for supplies via an electronic platforms. A new definition of an intermediary was inserted into the vat act together with a deeming provision which from 1 april 2019 deems the supply of eservices to have been made by the intermediary. Securities transfer tax administration act 26 of 2007. Finance in a calabash introduction valueadded tax vat is a tax that is levied on the supply by a vendor of goods or services in the course and furtherance of any enterprise carried on by a vendor. The vat act does not provide any guidance in this regard. Departmental guidance notes charitable religious or dgn 10 departmental guidance notes procedure of extension of time limits dgn 9 departmental guidance notes approval. Be it enacted by the parliament of the republic of south africa, as follows. South africa releases final eservices vat regulations. The section 18a certificate may only be issued in respect of donations received in cash or kind other than services. If you are a service provider that does not need the shipping address section on the invoice form, see south africa tax invoice template service here on. Bdo south africa incorporated, a south african personal liability company, is a member of bdo international limited, a uk company limited by guarantee.
Lu learning unit the income tax act the income tax act no. Valueadded tax in south africa legislation a complete collection of vat legislation. Taxation laws amendment act 27 of 1997 south african revenue service act 34 of 1997. South africa, lesotho, namibia and swaziland, the value for vat purposes will include insurance and freight. Section 82 deems a person who ceases to be a vendor to have made a supply of any goods or rights capable of cession, assignment or surrender, which forms part of. For goods coming from southern african customs union sacu member countries i. New laws to charge vat on software and other online. Unemployment insurance contributions act 4 of 2002. Revenue is raised for government by requiring certain businesses to register and to charge vat on the taxable supplies of goods and services. Section 111e of the value added tax act no 89 of 1991 the vat act sets out the requirements for zerorating to apply.
This act has been updated to government gazette 40004 dated 20 may, 2016. It is a persons very desire for certainty that underlies the provisions of the valueadded tax act, no 89 of 1991 vat act and the tax administration act, no 28 of 2011 taa that enables the commissioner of the south african revenue service sars to issue. The final valueadded tax vat act was adopted by parliament and promulgated in south africa on 12 june 19911. Vat pocket guide 20182019 tax consulting south africa. Valueadded tax act 89 of 1991 south african government. Amended by south african revenue service act 34 of 1997. The following acts are examples of the primary legislation sars. The vat rate in south africa is currently 15% on most goods and services and on imported goods, though there are some exceptions, for example some financial services. Due to the promulgation of the insurance act in 2018, it is proposed that certain definitions referenced in the vat act will be revised to ensure alignment. We are the leading resource for freely available legislation in south africa and are used daily by thousands of professionals and industry leaders. Pdf an analysis of south africas value added tax researchgate. Vat is an indirect tax and is levied on the value added in production during the different stages metcalf in baker and elliott,1997. The second vat increase was announced earlier this year, and the vat rate increased to 15% on 1 april 2018. Vat it sa is part of the global vat it group which is one of the leading valueadded tax vat reclaim companies in the world.
In june 2014, south africa made income earned by nonresident providers of electronic services to consumers liable to value. The relevant sections of the valueadded tax act 89 of 1991the act that provide for the exit vat are ss 82 and 105. Explanatory memoranda south african revenue service. With acts you are guaranteed the latest and most up to date resource for your legislative needs. Explanatory memorandum on the taxation laws amendment bill, 2019. One issue which is specifically not covered in the bulletin is the gstvat consequences of a final dissolution of a partnership, including the dissolution of a partnership as a result of a partner acquiring all the interests in the partnership from the other partners. Vat stands for value added tax, and it is a consumption tax which is collected incrementally, based on the added value of a product or service. Saica the south african institute of chartered accountants silke silke. The rate at which vat is charged was subsequently increased to. I am fully aware of my duties and responsibilities as pe r the valueadded tax act, 1991 and tax administration act, 2012. Vat it offers reclaim services to over 000 companies in 117 countries globally which include some of the major international banks, mining groups, telecommunication providers, manufacturing, major public entities, insurance groups and various listed companies.
Registration of body corporate as a vat vendor in terms of section 12f of the value added tax act. It is levied in terms of the valueadded tax act 89 of 1991. This is certainly the case for south africa as the south african valueadded tax act. Vat changes from the budget speech 2017 bdo south africa. In terms of a vat ruling issued by the south african revenue service sars to comair limited comair, dated 27 march 2017, your original flight eticket andor electronic miscellaneous document will serve as your original document for vat purposes. The position in south africa is likely to be the same. S 1, 4, 67, amended by taxation laws amendment act 27 of 1997 amended by revenue laws amendment act 46 of 1996. Income tax act 28 of 1997 south african revenue service act 34 of 1997. This act has been updated to government gazette 39667 dated 9 february, 2016. Download the lesotho revenue authority lra, which was established by act of parliament in 2001 and became operational in 2003, is principally responsible for the assessment, collection and remittance to the government of public revenues in lesotho. The download of a movie or the provision of the right to. A misconception is that if the donation consists of free services rendered to the pbo, the pbo must also issue a section 18 a certificate. Tax administration act 28 of 2011 south african government.
Acts online provides legislation, including amendments and regulations, in an intuitive, online format. Businesses are responsible for paying vat to the government but they can pass on this charge to their customers or clients by adding vat to the cost of invoiced goods and services. South african institute of chartered accountants integritax newsletter income tax and vat acts online the income tax act, 1962, valueadded tax act, 1991 and other tax acts may be accessed on the sars website the consolidated income tax act is available, in a pdf version, under the tax heading on the university of pretoria, laws of sa consolidated legislation website. Vat, replacing general sales tax gst, was introduced at a single rate of 12% and shortly thereafter reduced to 10%. An act to impose and charge value added tax on certain goods and services and to provide for the administration of the tax and matters related thereto. The value added tax act, 20 vat act gives the cabinet secretary for the national treasury cs treasury powers to issue regulations to guide the implementation of the vat act. Explanatory memoranda with money bills section 77 of the constitution they provide background on proposed new legislation, reasons for proposed changes to existing legislation and further explanations or examples where necessary. In addition, it will be clarified that the transfer of a longterm reinsurance policy is an exempt financial service. Vat is an indirect tax on the consumption of goods and services in the economy.
The vat act requires anybody conducting an enterprise in south africa to register as a socalled vat vendor. The collection of value added tax on crossborder digital trade jstor. Income tax act 58 of 1962 south african government. Pdf in this paper, the authors describe south africas value added tax vat, showing that 1 the vat is mildly regressive, and. In abc pty ltd v commissioner for the south african revenue service case no. Law firm fasken has warned that proposed changes the vat act in south africa could soon see local distributors and consumers footing the bill. In the past, typical ecommerce transactions were taxed in terms of a reverse charge mechanism, where the onus was on the consumer to pay.
Supply includes all forms of supply, whether voluntary compulsory or by operation. The value of imports for vat purposes must include all taxes and duties payable, and the cost of insurance and freight. The taxation laws amendment bill b 182019 tlab includes various amendments to section 72 of the vat lawa provision that has for many. Before 1991, south africa used an indirect taxation system, called gst general sales tax. The judgment dealt with the right of the south african revenue service sars to levy interest and penalties on the late payment of.
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