ENS Tax In Brief – Sales Taxes: VAT, GST

Below, please find issue 118 of ENS’ tax in brief, a
snapshot of the latest tax developments in South Africa

case law

• Richards Bay Mining (Pty) Ltd v C:SARS (2023/045310)
  [2024] ZAGPPHC
  

  • This case involved a High Court declarator application by the
    taxpayer (“Applicant”) on:
    

    • A point in limine raised by SARS objecting to the High
      Court’s jurisdiction – specifically the interpretation
      of section 105 of the Tax Administration Act No.28 of 2011
      (“TAA”) and whether the provision
      contains an ouster of the High Court’s inherent jurisdiction
      in respect of all matters related to tax administration procedures
      and provisions, i.e. whether the Tax Court was the only court with
      jurisdiction in respect of tax matters; and

    
    

    • The meaning and interpretation of section 4(2) of the Mineral
      and Petroleum Resources Royalty Act No.28 of 2008
      (“the Act”) – specifically the
      words “mineral resources”. The Applicant contended the
      phrase clearly indicated the plural form of the concept whereas
      SARS contended that it should be considered to be a reference to
      the singular form of the concept.




• The Applicant was successful on both issues. The High Court
  held that:
  

  • Section 105 of the TAA found no application on the facts and
    SARS’ point in limine was without substance. The
    issue on the facts (being the interpretation of section 4(2) of the
    Act) did not impugn an “assessment” or
    “decision” of SARS and hence section 105 of the TAA did
    not find application; and

  
  

  • No absurdity results in following the plural form of the
    concept of mineral resources in section 4(2) of the Act and that in
    the context of the Act as a whole the legislature did apply the
    singular form where so intended and that the change in the meaning
    of the word in section 4(2) of the Act to “mineral
    resources” by the legislature was intentional. To conclude
    otherwise, would defeat the purpose of the rules of statutory
    interpretation, especially where no absurdity would follow by
    applying that principle.

tax rulings

• VAT apportionment | published rulings
  

  • VAT Ruling 006 | varied turnover-based method in
    respect of a vendor in the asset-based financial
    services 

  
  

  • VAT Ruling 007 | varied turnover-based method in
    respect of a vendor in the micro-lending industry 

  
  

  • VAT Ruling 008 | varied input-based method in
    respect of a vendor in the short-term insurance industry 

  
  

  • A repository of all published alternative apportionment methods
    (eight in total to date) is available here.

SARS publications

• SARS Online Query | system and guide updated
  

  • The ‘Submit supporting documents’ and ‘Report
    new estate case’ queries have been updated in line with the
    latest system enhancements.

  
  

  • The following new queries have been included in the SARS
    External Guide that is available here:
    

    • The request for Auto Assessment status which enables the
      taxpayers to query whether they are part of the SARS Auto
      Assessment population or not.

    
    

    • The submit an LBI query which enables the taxpayers registered
      at the Large Business and International
      (“LBI”) or High Net Worth
      (“HNW”) to direct their queries to LBI
      or HNW.




• Third party data | annual submissions and
  guides
  

  • The SARS Third Party Data Annual Submissions process for the
    period 1 March 2023 to 29 February 2024 opens on 1 April 2023 and
    will close on 31 May 2024. 

  
  

  • The following guides relating to third-party data submission
    have been updated and made available on the SARS website:
    

    • The Guide for the Submission of Third-Party Data Using the
      Connect Direct Channel available here. 

    
    

    • The Guide for the Submission of Third-Party Data Using the
      https Channel available here.

    
    

    • The Manage Submission of Third-Party Data
      guideavailable here.




• Guide | SARS Customs Outward processing
  Procedure
  

  • Outward processing is a customs procedure whereby goods that
    are in free circulation (that is, not subject to customs control)
    are temporarily exported from South Africa to undergo processing or
    repair abroad. The processed or repaired goods are re-imported and
    released for home use with partial relief from import duty as only
    the added value, being the cost of repair or processing, is subject
    to the payment of duty and VAT on re-importation. 

  
  

  • This publication provides guidance on the outward processing
    customs procedure and is aimed at enhancing the understanding of
    the customs outward processing procedure. 

  
  

  • Find the SARS Customs Outward processing Procedure
    Guide here.




• Guide | SARS Overview of Manufacturing Rebate and
  Drawback Procedures
  

  • To stimulate the local manufacturing industry, a rebate of
    customs duty and/or a VAT exemption is provided for on specific
    imported raw materials used in local manufacturing in certain
    specified circumstances. Provision is also made in certain
    circumstances for a drawback of customs duty that the importer paid
    when importing goods that were used in manufacturing of goods that
    were subsequently exported. The Customs and Excise Act, 91 of 1964
    makes provision for duty rebates and drawbacks while the
    Value-Added Tax Act 89 of 1991 makes provision for VAT
    exemptions. 

  
  

  • This guide aims to enhance the understanding of the customs
    Manufacturing Rebate and Drawback processing procedures. 

  
  

  • Find the SARS Overview of Manufacturing Rebate and Drawback
    Procedures Guide here.




• SARS IBIR-006 Tax Directives Interim Interface
  Specification | Version 6.701
  

  • To facilitate the upcoming “two-pot retirement
    system” changes which will become effective on 1 September
    2024, SARS will be making enhancements to the Tax Directives
    process, which changes are detailed in the Interim Interface
    Specification. 

  
  

  • Once the law has been promulgated, an updated version of the
    Interface Specification will be made available. SARS will also
    communicate trade testing dates in due course. 

  
  

  • The publication describes the generic interface between the
    Income Tax System (“ITS”) of SARS and
    any external system used in applying for tax directives
    (IRP3). 

  
  

  • The publication describes the protocol and data format to use
    when applying for directives electronically and receiving responses
    to such applications. 

  
  

  • The SARS system shall be capable of processing different types
    of directive requests and either provide the requested directive or
    decline the directive request and provide a reason for doing so. o
    Find the Tax Directives Interim Interface Specification here.




• SARS External Guide Excise | DA 180 Environmental
  Account for Carbon Tax | Revision 1
  

  • The purpose of this guide is to assist business entities that
    generate carbon emissions liable to carbon tax in South Africa, to
    complete the DA 180 Environmental Account for Carbon Tax and its
    annexures.

  
  

  • The guide has been revised as follows:
    

    • To align with the relevant sections of the Customs and Excise
      Act, No. 91 of 1964. 

    
    

    • Updated the name as well as acronym for the Department of
      Forestry, Fisheries and the Environment.

    
    

    • The calculation of net levy payable was amended.

    
    

    • The document code changed from SE-CBT-03-M01 to SE-CBT-04. o
      Find the guide here.




• SARS SE-SP-02 – Spirits – External Policy
  Guide | Revision 15
  

  • The Excise Spirits Policy has been updated to align with the
    following:
    

    • The outcome of a court case in SARS’s favour which
      confirmed that the absolute alcohol content of flavourings is
      dutiable.

    
    

    • The legislation changes for Rebate item 621.21. 

    
    

    • The legislative requirements for Rebate item 624.50.

  
  

  • Find the revised policy guide here.




• SARS SE-OFB-02 – Other Fermented Beverages – External
  Policy | Revision 13
  

  • The purpose of the policy is to explain:

1. The activities that are permitted in the spirit
   warehouses;




2. Completion of the DA 260 account;




3. The assessment of excise duty which involves duty paid removals
   and non-duty paid removals; and IV. Reprocessing, destruction or
   abandonment.
   

   • The published Excise Other Fermented Beverages policy has been
     updated to indicate the exclusions in terms of item 624.50.

   
   

   • Find the revised external policy here.

• SARS Ad Valorem Excise Duty – External Policy and
  Ad Valorem Value Determination | Revision 7
  

  • Ad Valorem Excise Duty is payable on certain locally
    manufactured goods and goods imported of the same class or kind. Ad
    Valorem Excise Duty is determined in terms of Schedule 1 Part 2B,
    which specifies the goods on which duty is levied, each with its
    own applicable rate of duty. The policy and annexure have been
    updated to align with legislation. 

  
  

  • Find the Ad Valorem Excise Duty – External Policy here and Ad Valorem Value Determination
    – External Annexure here.

customs and excise

• SC-CF-19-A02 – Facility Code List –
  External Annexure
  

  • The facility codes used in Box 30 on the Customs Clearance
    Declaration (CCD) have been updated to include the details of the
    new approved container depot – Imperial Clearing and
    Forwarding South Africa in Durban. 

  
  

  • Find the Facility Code List – External Annexure here.




• Customs and Excise Act, 1964 (“Customs and Excise
  Act”) | Tariff Amendments
  

  • The tariff amendments notices, were published in
    the Government Gazette 50381 on 28 March 2024. Publication details
    for tariff amendment notices R4551, R4552, R4553,
    R4554, R4555, and R4556, are now available and relate to the
    following amendments:
    

    • With effect from 1 April 2024:
      

      • Part 3A of Schedule No. 1, by an increase of 4c/bag in the rate
        of environmental levy on plastic bags from 28c/bag to 32c/bag to
        give effect to the Budget proposals announced by the Minister of
        Finance on 21 February 2024

      
      

      • Part 3C of Schedule No. 1, by an increase of R5/lamp in the
        rate of environmental levy on electric filament lamps from R15/lamp
        to R20/lamp to give effect to the Budget proposals announced by the
        Minister of Finance on 21 February 2024

      
      

      • Part 3D of Schedule No. 1, by an increase of R14 per g/km CO2
        in the rate of motor vehicle carbon dioxide emissions levy from
        R132 to R146 on new passenger vehicles on emissions exceeding
        95g/km and, by R19 per g/km CO2 from R176 and R195 on new double
        cab vehicles on emissions exceeding 175g/km, respectively to give
        effect to the Budget proposals announced by the Minister of Finance
        on 21 February 2024

    
    

    • With retrospective effect from 1 January 2024:
      

      • Part 3F of Schedule No. 1, by an increase of R31 per tonne in
        the rate of environmental levy on carbon dioxide equivalent from
        R159 to R190 per tonne to give effect to the Budget proposals
        announced by the Minister of Finance on 21 February 2024 

      
      

      • Part 5A of Schedule No. 1, by the substitution of Notes
        7(a)(vi) and b(vi) in order to change the density factors for the
        calculation of the carbon fuel levy from 0.75 to 0.7405 kilogram
        per litre for petrol and from 0.0845 to 0.8255 kilogram per litre
        for diesel to give effect to the Budget proposals announced by the
        Minister of Finance on 21 February 2024

    
    

    • With effect from 3 April 2024:
      

      • Part 5A of Schedule No. 1, by substitution to Note 8 as well
        the increase of 1c in the carbon fuel levy from 10c/li to 11c/li
        for petrol and from 11c/li to 14c/li for diesel, respectively to
        give effect to the Budget proposals announced by the Minister of
        Finance on 21 February 2024

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

POPULAR ARTICLES ON: Tax from South Africa