JOHANNESBURG – Taxpayers who accidentally reduce their tax liability due to a reasonable mistake without any intent to defraud the Taxman, won’t be subjected to harsh understatement penalties in future. The Tax Administration Laws Amendment Bill was introduced in the National Assembly last week and revises regulations to such an extent that the South African Revenue Service (Sars) won’t impose penalties in cases where the understatement by the taxpayer “results from a bona fide inadvertent error”. This follows criticism from tax practitioners and taxpayers on the harsh penalties previously imposed even where taxpayers had no intention of deceiving Sars.
Category: VAT
What a Wicked Web We Weave, When We Issue Bogus VAT Invoices To Deceive!
Cash-strapped companies that are staring liquidation in the face sometimes resort to desperate measures to convince the court hearing an application for winding-up that they are not, in fact, insolvent and should not be wound up. A novel and imaginative method was adopted by the company, a VAT vendor, in ITC 1865 (2013) 75 SATC 250, though it is unlikely to become popular or to find its way into tax-planning manuals.
Tax Admistration Act – Jurisdiction of the courts
When litigating against SARS, it is of critical importance that the taxpayer institute proceedings in the proper forum. In this regard, an important question arises as to which issues are justiciable in the Tax Court and which in the High Court. A wrong decision by the taxpayer and his advisers may have the consequence that time limits to bring proceedings in the correct court have expired, and that the taxpayer is left without a remedy.
Tax Adminstration Act No 28 of 2011 – Tax Litigation
Tax litigators will now have to consider, inter alia, the impact of certain provisions under the Tax Administration Act No. 28 of 2011 (the TAA) as amended by the Tax Administration Laws Amendment Act No. 21 of 2012 on the doctrine of legal professional privilege and a recent judgment reflecting the view of a court with regards to the adherence to the rules of the Tax Court by the South African Revenue Service (SARS).
The negative impact of e-commerce VAT on education
Educational institutions making exempt supplies will likely be negatively impacted with the impending introduction of VAT on e-commerce transactions in South Africa with effect from 1 April 2014. One could even go as far to say that educational institutions had it good under the reverse charge mechanism (also referred to as VAT on ‘imported services’) as there was arguably no VAT leakage when dealing with foreign suppliers of certain e-c ommerce services.
VAT Invoice: The Importance Of A Compliant Tax Invoice
Author: Nicole Paulsen (CliffeDekkerHofmeyr) South Africa operates a value-added tax (VAT) system whereby the VAT charged by suppliers is subtracted from the VAT charged to customers to calculate the VAT payable or refundable. This system was established to relieve the trader entirely of the burden of the VAT payable or paid in the course of all his economic activities.
Claiming VAT inputs
Commissioner for the South African Revenue Service v De Beers Consolidated Mines Limited 74 SATC 330, the current policy of the South African Revenue Service (SARS) is for a vendor to claim an input tax credit in respect of any Value-added Tax (VAT) paid on an expense, a direct or immediate link must exist between that expense and a taxable supply made by that vendor. The ultimate purpose for incurring the expense is ignored.
VAT Registration of Foreign Business
Author: Carmen Moss Holdstock (Cliffe Dekker Hofmeyr) The draft Taxation Laws Amendment Bill 2013 (TLAB) was released for public comment on 5 July 2013. Among other things, the TLAB proposes that, in order to curtail foreign businesses that supply goods and services in ‘cyber space’ from escaping the VAT net, all foreign businesses supplying digital goods and services will be required to register as VAT vendors in South Africa.
Proposed new VAT rule for foreign e-commerce suppliers
The draft Taxation Laws Amendment Bill for 2013, released for public comment in early July 2013, has proposed an interesting new rule applicable to foreign suppliers of e-commerce products. Presently foreign suppliers of e-books, e-music, e-movies or e-software programmes that transact over the internet with their South African customers are not required to register as vendors for value-added tax (“Vat”) purposes. South African Vat legislation does not cater for place of supply rules in order to determine which jurisdiction has taxing rights in respect of supplies made by foreign suppliers to South African customers.
Sars has increased powers under the Tax Administration Act
An overview The recently promulgated Tax Administration Act, No. 28 of 2011 (TAA) contains provisions that grant some dramatically increased powers to the South African Revenue Service (Sars). Tax recovery on behalf of foreign governments Section 185 of the TAA contains the measures available to Sars to recover tax on behalf of foreign governments. Broadly defined, the provisions of section 185 provide that revenue authorities of a foreign country (with which South Africa has a tax treaty) can request Sars to assist in the collection of foreign taxes due by a person to that country.