Recently the following Acts containing amendments to the VAT Act were published.
A brief summary of some of the more important VAT amendments is provided below:
- Life insurance / financial services – textual amendments have been made in section 2 to align the terminology used with reference to the Insurance Act, 2017. As a result, the VAT Act now refers to “life” insurance and not “long-term” insurance. The amendments take effect from 19 January 2022.
- Temporary letting of dwellings by developers – New provisions in the form of sections 9(13), 10(29), 16(3)(o) and 18D have been introduced to deal with dwelling units that have been developed for sale by a developer and such dwellings are temporarily let for exempt residential use whilst the developer continues to pursue a taxable intention of selling the units. Section 18D applies from the date that any newly developed property held for taxable supplies is temporarily let for the first time on or after 1 April 2022. More information in this regard will be provided in a future issue of VAT Connect. Note that the 2022 Draft TLAB contains a few proposed amendments concerning the application of section 18D.
- International telecommunications services – section 11(2)(y) was further amended to align the zero-rating of international telecommunications services with the International Telecommunication Regulations. The amendments confirm that the zero-rating will not apply if the telecommunications service is provided to any branch, main business or customer of an International Telecommunications Service Provider situated in the Republic. The only exception in this regard is the supply of international roaming services.
- Zero-rated foodstuffs – Item 2 of Part B to Schedule 2 to the VAT Act has been extended to include super fine maize meal in the list of zero-rated foodstuffs contemplated in section 11(1)(j).
- Estimated assessments – significant amendments were made to section 95 of the TA Act regarding certain aspects of estimated assessments with effect from 20 January 2021 and then again with effect from 19 January 2022. Section 95 of the TA Act previously allowed the Commissioner to make an estimated assessment if a taxpayer does not submit a return or submits a return or relevant material that is incorrect or inadequate. These circumstances have now been expanded to include a situation where the taxpayer does not submit a response to a request for relevant material after delivery of more than one request for such material to the taxpayer. The Commissioner bears the burden of proving that the estimated assessment is valid and reasonable. An estimated assessment does not detract from the obligation by a taxpayer to submit a return or the relevant material for the tax period concerned. A taxpayer may, however, within 40 business days from the date of the estimated assessment, request SARS to issue a reduced assessment or additional assessment by submitting a true and full return or the relevant material. If the taxpayer fails to do this, the assessment becomes final and will not be subject to objection or appeal. In that case, the burden of proof relating to the validity or reasonableness of the estimated assessment will move from the Commissioner to the taxpayer. The period of 40 business days cannot be extended beyond the prescription period for VAT in section 99 of the TA Act except in a case where the estimated assessment is raised within 40 days of the prescription date. A consequential amendment was made to section 99 of the TA Act in this regard to provide that the prescription periods do not apply in a case where it is necessary to give effect to a reduced or additional assessment requested within the period of 40 business days.
- VAT Notice R.2185 was published in GG 46589 dated 24 June 2022 regarding the inclusion of licensed customs and excise storage warehouses as places where diplomats may be able to obtain new motor vehicles
