The National Treasury this week gazetted the Regulations on Domestic Reverse Charge Relating to Valuable Metal, which is meant to serve as an anti-abuse measure aimed at foreclosing schemes and malpractices to claim undue value-added tax (VAT) refunds from the South African Revenue Service (Sars) by vendors operating in the value chain relating to high-risk goods containing gold.
This includes gold bars, gold granules, gold doré and gold jewellery, the regulations state.
The regulations make provision for registered vendors acquiring valuable metal to pay VAT upon the supply of the valuable metal over to Sars before they can claim the VAT input tax refund.
This additional compliance process makes it difficult for registered vendors to claim input tax for VAT that was not actually declared and paid to Sars by the supplier-registered vendor for the valuable metal.
The gazetting of the new regulations follows the publication of the draft regulations, which was made available for public comment on October 6 last year. Taxpayers and stakeholders were given until November 31, 2021, to submit their written comments.
Treasury said it had received 12 written submissions from a range of stakeholders, including industry associations, tax practitioners and companies.
Substantive comments were received in relation to the definition of the term “valuable metal”, specifying the type of valuable metal that falls within the ambit of the regulations. Other comments were received in relation to the responsibilities of the supplier and recipient of said valuable metal, as well as transitional measures and the effective date.
Following receipt of public comments, several workshops were held with the taxpayers and stakeholders to discuss the written comments. The first workshop was held on December 14 last year, the second workshop was held on March 14 this year and the third workshop on April 13.
After the workshops, further changes were made to the definition of “valuable metal”, as well as to the responsibilities of the supplier and recipient thereof. Changes were also made to the transitional measures and the effective date of the regulations.
The regulations will now come into effect on July 1.
In terms of the transitional measures, registered vendors will be allowed a period of one month from the start date until August 1 to ensure they comply with the requirements set out in the regulations.
This implies that registered vendors must account for and pay VAT in respect of transactions falling within the ambit of the regulations in the tax period covering August.