24 June 2022
Information
The Commissioner issued a public notice requiring registered vendor or representative vendor to update its VAT registration when they are deal in the supply of valuable metals that are subject to domestic reverse charge. The registration details of such vendors should be updated within 21 business days from —
(a) the earlier of implementation of the domestic reverse charge or the date that a supply of valuable metal is made which is subject to the domestic reverse charge, to indicate that such vendor makes supplies of valuable metal that are subject to the domestic reverse charge; or
(b) the date that such vendor permanently ceases to make such supplies to indicate that such vendor no longer makes such supplies or has ceased to carry on all enterprises. Read the public notice here
Background on the domestic reverse charge
It came to Government’s attention that while the acquisition of gold jewelry by VAT vendors from non-VAT vendors should allow for the deduction of notional input VAT, in practice this provision significantly contributed to creating an enabling environment to obtain fraudulent input tax deductions. Jewelry is smelted along with gold coins and illegally acquired raw gold.
As a result, in 2014, changes were made to the definition of “second hands goods” in the VAT Act to the effect that second-hand goods made from precious metals were excluded from obtaining the notional input tax, unless such goods were re-sold in the same or substantially the same state as they were bought in. Read more from the Explanatory Memorandum issued by National Treasury Here.
Need assistance
Should you have any technical queries send an email to taxtech@saiba.org.za.
