Contents. vii. Page INTRODUCTION...

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1 Contents INTRODUCTION... CHAPTER 1 OUTLINE OF VAT: REGISTRATION 1 Background Basic rules Registration are you an enterprise? Partnerships Compulsory registration Voluntary registration Branch registration Refusal to register and deregistration... 8 CHAPTER 2 TAXABLE SUPPLIES: OUTPUT VAT 8 General Supplies of goods Supplies of services Deemed supplies Deregistration Short-term insurance Excisable goods Transfers between branches Subsidies by state, municipality or foreign donors Municipal services Gambling Non-payment of debt within twelve months Temporary removal of goods from customs controlled area Excess payments Group rules Warranties Output tax on change of use CHAPTER 3 IMPORTATION OF GOODS AND SERVICES 13 General Import of goods Imported services vii v

2 viii Concise Guide to VAT CHAPTER 4 TIMING AND VALUATION 16 General Cash basis for time of supply Consideration in money or otherwise Special rules Special rules: Instalment credit agreement Special rules: Door-to-door credit sales Special rules: Lay-by sales not exceeding R Special rules: Vending machines Special rules: Sale of fixed property Special rules: Rental agreements Special rules: Periodic payments for services Special rules: Progressive supplies Special rules: Fringe benefits Special rules: Gift vouchers Special rules: Retail tokens and tickets Special rules: Manufacturers discount stamps and vouchers Special rules: Undetermined contract price Special rules: Branches in other countries Special rules: Connected persons Special rules: Grants and subsidies Special rules: Commencing business with private assets/new registration Special rules: Deregistration Other special rules/apportionment Apportionment of lump sum consideration CHAPTER 5 EXPORTS AND ZERO-RATING 20 General Exports Exports: Goods sold and exported Exports: Rental of movables in an export country Exports: Transfer of goods to and sales by foreign branches Exports: Export services in general and related supplies Exports: Foreign-going ships Exports: Foreign-going aircraft Exports: Trains Exports: International transport Exports: Other export-related services Movable goods delivered in South Africa Triangular supplies for foreign entity... 46

3 Contents Delivery to a customs controlled area Other zero-rated supplies: Sale of a going concern Other zero-rated supplies: Farming consumables Other zero-rated supplies: Fuel, unwrought gold and Kruger rands Other zero-rated supplies: Foodstuffs Other zero-rated supplies: Municipal rates Other zero-rated supplies: Fixed property situated in Customs Controlled Area Other zero-rated supplies: Animal Disease Act compensation Other zero-rated supplies: Foreign donations Other zero-rated supplies: Warranties Other zero-rated supplies: Owners of race horses Other zero-rated supplies: Storage warehouses and inbound duty and tax free shops Other zero-rated supplies: Land reform transactions Local delivery of goods to foreign customers/tourists Part one of the Export Scheme refund system Part two of the Export Scheme optional zero-rating Diplomats CHAPTER 6 INPUT TAX CREDIT AND TAX INVOICES 25 General Full credit of input VAT No credit of input VAT No credit of input VAT: Motor cars No credit of input VAT: Entertainment No credit of input VAT: Sporting and social club fees and subscriptions No credit of input VAT: Medical-aid funds Clawback of input credit late payment of debt Adjustments Partial credit Change of use: General Change of use: Taxable to wholly exempt Change of use: Wholly exempt to taxable new registration Change of use: Partial change of use taxable to exempt Change of use: Partial change of use exempt to taxable Change of use: Non-taxable use CCAE & IDZ operator Change of use: Non-taxable use Temporary rental of fixed property Tax invoices ix

4 x Concise Guide to VAT CHAPTER 7 EXEMPT SUPPLIES 30 General Financial services Sharia compliant financing arrangements Group finance/management companies and inter-company loans Residential leases and fringe-benefit accommodation Surface passenger transport Educational services Management of group housing and commercial premises Land outside the Republic Associations not for gain and employee organizations Municipalities Goods sold in bond Bargaining councils Political parties CHAPTER 8 VAT RETURN 43 General Tax period Lodging tax returns Invoice and cash basis accounting for VAT Refunds of input tax CHAPTER 9 PARTICULAR ORGANIZATIONS, TRANSACTIONS AND EVENTS 48 General Accommodation enterprises Agents and representatives Agents and representatives: Administrative provisions Agents and representatives: Auctioneers Agents and representatives: Brokers and commission agents Agents and representatives: Consignment sales Agents and representatives: Co-operatives and agricultural pools Agents and representatives: Estate agents Agents and representatives: Franchisees Agents and representatives: Ships agents Agents and representatives: Export and import agents Agents and representatives: Time-share pools Agents and representatives: Travel agents Catering and canteens... 95

5 Contents 52 Education Farmers Financial institutions Partnerships/joint ventures Second-hand trade and transactions Short-term insurance (fire, theft and accident) Non-profit organizations, municipalities and public authorities Transport operators Bad debts Barter and exchange Betting transactions Business gifts Compensation and damages Demonstration use Discounts: Debit and credit notes Refunds of foreign VAT paid Fringe benefits Gift and similar tokens or vouchers Lay-by sales Mail order Motor vehicles Pre-incorporation contracts Real estate Repossessions and sales in execution Returnable and other containers Recoupment of expenses/income tax allowances Sale of a going concern Samples Subsidies and gifts Trusts and estates Supplies by small-scale farmers Expropriation of land Small retailers VAT package CHAPTER 10 CHANGE IN RATE 85 General Fixed-price contracts Variations in the rate of tax Change in rate: Supply of goods Change in rate: Rentals and other progressive supply of goods Change in rate: Construction, repair and assembly contracts Change in rate: Services (other than those referred to above) Change in rate: Lay-by sale xi

6 xii Concise Guide to VAT 88 Anti-avoidance Residential housing and building contracts Bad debt Debit and credit notes CHAPTER 11 MISCELLANEOUS ADMINISTRATIVE PROVISIONS 92 General overview Overcoming difficulties; regulations; amendments Rulings issued by the Commissioner No recovery of tax after five years Assessment, objection and appeal Payment of tax, refunds and penalties Representative taxpayers Record-keeping and inspections Avoidance, evasion and offences FIFA provisions Voluntary disclosure APPENDIX A Selected extracts from the Act B Additional guidance INDEX