VAT Ruling Application Procedure

Transcription

1 VAT Ruling Application Procedure VAT ruling or a VAT class ruling The issuing of a VAT ruling or a VAT class ruling (hereinafter referred to as a VAT Ruling unless the context indicates otherwise) is governed by section 41B 1 of the Value-Added Tax Act No. 89 of 1991 (VAT Act) read with Chapter 7 of the Tax Administration Act No. 28 of 2011 (TA Act). The process to be followed when applying for a VAT Ruling is set out below. This document does not deal with the process to be followed when applying for an Advance Tax Ruling (ATR), which process is also published on the SARS website. The differences between a VAT Ruling and an ATR issued under Chapter 7 of the TA Act, are set out in the Annexure. VAT Ruling or a decision by the Commissioner under the VAT Act A VAT Ruling is a written document provided by the Commissioner for SARS, which interprets the provisions or the application of provisions of a specific set of facts. A VAT Ruling is binding on the Commissioner. Therefore, if a VAT Ruling applies to a person in accordance with section 83 of the TA Act, SARS must interpret or apply the VAT Act to the person in accordance with that VAT Ruling (refer to section 82 of the TA Act). The process discussed below must be followed when applying for a VAT Ruling. Decisions should be distinguished from a VAT Ruling, the main distinction being that a VAT Ruling relates to the interpretation of the VAT Act whereas a decision constitutes the exercising of a discretion (refer to section 9 of the TA Act). Unlike VAT Rulings, certain decisions are subject to objection and appeal as set out in section 32 of the VAT Act and section 104 of the TA Act. The difference between a VAT Ruling and a decision may be illustrated by the examples set out below. Example 1 Application for a VAT Ruling Facts: A vendor, supplying marketing services to a non-resident, wants to confirm whether VAT may be levied at the zero-rate under section 11(2)(l). Does the request qualify as an application for a VAT Ruling or a decision? Result: The question relates to the interpretation of the law with reference to a specific set of facts. The vendor may therefore apply for a VAT Ruling. 1 All references to provisions or sections are to provisions or sections of the VAT Act, unless otherwise indicated.

2 2 Example 2 Application for a decision Facts: A vendor, registered on the invoice basis, makes a written application to be registered on the payments basis under section 15(2) by completing and submitting the prescribed form (Form VAT117). Does the request qualify as an application for a VAT Ruling or a decision? Result: The Commissioner is required to exercise discretion in directing that the vendor may be registered on the payments basis. The Commissioner will give effect to the decision by changing the accounting basis to the payments basis (should the vendor qualify to be on the payments basis) and issue a notification accordingly. The application will therefore not qualify as a request for a VAT Ruling. Non-binding private opinions An application for a non-binding private opinion must be submitted to the legal manager at the SARS branch office where the applicant is registered for VAT. In the case of a nonvendor, the application should be made to the branch office nearest to the applicant s business address. A non-binding private opinion is not binding on the Commissioner, but is meant to provide informal guidance on VAT, based on a particular set of facts and circumstances. Steps to follow when applying for a VAT Ruling In general, the process for issuing a VAT Ruling involves a number of steps, beginning with the submission of a VAT Ruling application and ending with the issuing of a VAT Ruling signed by a designated Senior SARS Official as defined in section 1 of the TA Act and in certain circumstances, the publication thereof. These steps are summarised below. Submission of a VAT Ruling application The VAT rulings process begins with the submission of a VAT Ruling application (VAT301) via (VATRulings@sars.gov.za) or facsimile ( ). Submissions received by any other means (for example, submissions dropped off at SARS branch offices or e- mailed to any SARS official) will not be accepted. Form and content of the application Applications for a VAT Ruling must be submitted on the prescribed VAT Ruling Application Form (VAT301) which may be obtained on the SARS website. Additional annexures listed in the VAT301 as well as any other supporting documents must accompany the VAT Ruling application. It is important to note that an application that is made on behalf of an applicant, must be accompanied by a SARS Power of Attorney (available on the SARS website). In addition to the VAT301 form, the application must contain the minimum information prescribed under section 79(4) of the TA Act [excluding section 79(4)(f) and (k)]. The information required is set out below: The applicant s name, VAT registration number (if applicable), Company/Close Corporation/Trust Fund registration number or Identity Number, postal address, address and telephone number. (If the identity of class members is not easily determinable from the application documents, the applicant may be requested to provide further particulars of the members.)

3 3 The applicant s tax practitioners name, postal address, address and telephone number, if applicable. A description of the class members where applicable. A full and accurate description of the transaction (including financial implications). The impact the transaction might have upon the tax liability of the applicant or class members or if relevant, any connected person in relation to the applicant or class member. Any other transaction that was entered into before the application was filed or that the applicant may enter into after filing the application, if that other transaction may have a bearing on the tax consequences of the transaction, or may be considered to be part of a series of transactions involving the transaction. The relevant statutory provision(s) or issue(s). The reasons why the applicant believes the specific ruling(s) should be granted. The applicant s interpretation of the relevant statutory provision or issues, as well as an analysis of any relevant authorities that the applicant considered or is aware of, whether or not it supports the specific ruling(s) the applicant is seeking. A statement confirming that all tax returns required to be rendered by the applicant (or in the case of a VAT Class Ruling application, the class members if there are less than 10 members) under a tax Act have been rendered and tax has been paid or arrangements acceptable to SARS have been made for the submission of any outstanding returns or for the payment of any outstanding tax; the applicant(s) complied with any registration requirements under a tax Act with regard to any tax for which the applicant is liable, unless the application concerns a ruling to determine an applicant s liability to register under a tax Act; the rejections under section 80 of the TA Act do not apply to the application; the details contained in the VAT Ruling application and annexes are true and correct; and the applicant s consent to the publication of the VAT Ruling as required by the TA Act. The above information is intended to ensure that the Commissioner has all the details pertaining to the transaction and the potential tax consequences for each of the parties involved. Note: Any information submitted is subject to the secrecy provisions under section 69 of the TA Act and will be kept strictly confidential. Pre-acceptance test On receipt of a VAT Ruling application, the VAT Ruling administrator will perform the following compliance checks: The VAT301 form has been completed and all relevant annexes are attached (including the power of attorney, where applicable); and No VAT returns and/or payments are outstanding or arrangements acceptable to SARS were made to submit the outstanding returns and/or payments.

4 4 If the applicant fails the compliance checks above, the application will not be accepted and the applicant will be notified accordingly. The applicant can however rectify the noncompliance and resubmit the application. Rejection of VAT Ruling application A VAT ruling application may be rejected if the requested information is not submitted within 14 business days (unless another period is agreed upon); or the application deals with a matter listed in section 80 of the TA Act [including matters listed in a public notice published under section 80(2)]. In this regard Public Notice 103 [Government Gazette dated 8 February 2013] (the Notice 2 ) allows the Commissioner to reject applications containing certain aspects of which the following are relevant to VAT Rulings where the supplier of the goods or services is not the applicant or co-applicant and the application pertains to the VAT liability of a supply of goods or services made by that supplier; confirmation whether a person is acting as an agent or principal in respect of a supply of goods or services; the application of section 8(15) and determining whether a supply of goods and/or services constitutes a single supply; confirmation whether the technical requirements of electronic invoicing have been met; requests for the approval of the attribution, allocation or apportionment of input tax, excluding a request for an alternative apportionment method under section 41B; and applications involving transactions in respect of which material facts cannot be established at the time of the application. SARS will reject a VAT Ruling application involving an issue that is the same or substantially similar to an issue that is currently before SARS in connection with an audit, investigation or other proceeding involving the applicant or a class member or a connected person in relation to the applicant or class member; the subject of a policy document or draft legislation that has been published; subject to dispute resolution under Chapter 9 of the TA Act; or an issue upon which the applicant already received an unfavorable ruling. 2 Including any further Notices or updates issued.

5 Confirmation and reference number 5 A Letter of Acknowledgement (the Letter) will be issued by the VAT Ruling administrator in the case of a successful application. The Letter will include a reference number for the application, the name of the SARS official responsible for drafting the VAT Ruling (the Drafter) and the estimated time to completion. Designated SARS officials at the SARS branches, Large Business Centre and Legal and Policy Division (LAPD) are responsible for the drafting of VAT Rulings. Note that the estimated time to completion will be calculated from the date that the application has been accepted (that is, not the date that the application has been submitted). The allocated reference number must be used in all further communication in respect of the application. In certain instances, additional information may be requested under section 79(5) of the TA Act as part of the Letter of Acknowledgement. This additional information must be submitted within 14 business days (or other period stipulated) from the date of the request unless an extension is granted in writing. No work will commence on the application until the requested information has been submitted. The estimated time to draft the VAT Ruling will also be adjusted accordingly. Substantive review Once all the information has been received, the Drafter will proceed with the substantive review of the application. During this process, further additional information may be requested. As stated above, the additional information must be submitted within prescribed timelines. Failure to submit the required information within the period stipulated in the request for additional information may result in the application being rejected. Meetings During the substantive review process, meetings may be required to discuss and clarify the issues pertaining to the application. The applicant may be requested to update the application with additional facts disclosed during these meetings. Proposed negative VAT Ruling(s) In the case of a negative VAT Ruling (that is, where the VAT Ruling to be made differs materially from the VAT Ruling sought), SARS will provide the applicant with an opportunity to make representations, before issuing the VAT Ruling. The applicant has the option to request that the application be withdrawn. In this instance, all work in respect of the VAT Ruling will cease and the VAT Ruling Administrator will issue a letter acknowledging that the VAT Ruling application is withdrawn and no VAT Ruling will be issued. In certain limited cases, the applicant will have the opportunity to provide revisions to the background provided in the application in order to clarify certain issues. However, in the case where the facts materially change, or the VAT Ruling requested is amended, the subsequent application may be treated as a new application and the original application will be withdrawn. Sanitisation of VAT Rulings In applying for a VAT Ruling, the applicant consents to the publication of the VAT Ruling in a sanitised format (that is, without revealing the identity of the applicant, class member or other persons identified or referred to in the VAT Ruling).

6 6 The applicant will be provided with the edited draft VAT Ruling for review and comment, which will be considered before its publication. The draft will be accompanied by a cover letter stating the name of the SARS official responsible for drafting the sanitised VAT Ruling (Allocated person). The applicant must review the draft carefully and notify the Allocated person if the draft contains confidential information that should be deleted. In the event of a dispute, the Commissioner s determination of the content of the published VAT Ruling is final. In the case of VAT Class Rulings, an applicant may consent in writing to the inclusion of information identifying it or the proposed transaction, in order to facilitate communication with class members. Publication of sanitised VAT Ruling Not all VAT Rulings issued will be published. A VAT Ruling that is materially the same as a VAT Ruling already published, or VAT Rulings that have been withdrawn before publication, will not be published. In certain limited circumstances, due to unique facts relating to the parties to the transaction or to the transaction itself, it may not be possible to publish the VAT Ruling in a form that would not reveal confidential information. In this instance, the Commissioner may publish a summary of the issues raised and the decision taken instead of the sanitized version of the VAT Ruling. Non-binding private opinions or decisions (including decisions under sections 17(1) and 72) are not VAT Rulings as envisaged in section 41B of the VAT Act and will therefore not be published. Issuance of the VAT Ruling The final signed VAT Ruling will only be issued after the applicant has submitted comments on the draft edited VAT Ruling as discussed above. The estimated finalisation date will be adjusted accordingly. All VAT Rulings issued must be signed by a Senior SARS official within the Interpretation and Rulings division of LAPD. The VAT Ruling will be sent to the address submitted on the VAT Ruling application.

7 Annexure Differences between a VAT Ruling and an Advance Tax Ruling (ATR) VAT Rulings ATR Submission of Prescribed SARS efiling. application (VATRulings@sars.gov.za) or fax number ( ). Application fee None. Yes. Pre-screening No. Yes. checklist to be completed by applicant Form of application Complete VAT301 form. Per SARS efiling. Content of Same as ATR except draft ruling Comprehensive. application and description of information to [Section 79 of TA Act.] be deleted before publication not required. [Section 41B of VAT Act read with section 79 of TA Act.] Pre-acceptance test Yes. Yes. Request for Applicant has to submit additional supporting documents documents within ten business days, unless extension is granted. 7 Applicant has to submit documents within five business days, unless extension is granted. Cost recovery fee None. Yes. Depends on complexity Engagement contract No. Status check Drafter listed in the acknowledgement letter and VATRulings@sars.gov.za. Proposed Discuss with applicant if proposed ruling/decision ruling is negative. of ruling. Yes. efiling. Discuss with applicant before finalisation. Publication Yes, where applicable. Yes. Binding status Binding on the Commissioner. Binding on the Commissioner. Objection and appeal Not subject to objection and Not subject to objection and appeal. appeal.