On June 13, 2022 the National Treasury Department of the Republic of South Africa on its website published the Regulations on domestic reverse charge relating to valuable metal, issued in terms of section 74(2) of the Value-Added Tax Act, 1991 (Act 89 of 1991) that were published in the South African Government Gazette of June 8, 2022 and the accompanying Explanatory Memorandum. The Regulations are an anti-abuse measure aimed at foreclosing schemes and malpractices to claim undue VAT refunds from SARS by vendors operating in the value chain relating to high-risk goods containing gold, for example, gold, gold bars, gold granules, gold doré or jewellery (“valuable metal”). The Regulations make provision for registered vendors acquiring valuable metal, to pay VAT on the supply of “valuable metal” over to SARS before these registered vendors can claim the VAT input tax refund.

 

The Regulations will come into operation on 1 July 2022. In terms of the transitional measures, registered vendors will be allowed a period of one month from July 1, 2022 to August 1, 2022 to ensure that they comply with the requirements of Regulations. This implies that registered vendors must account for and pay VAT in respect of transactions falling within the ambit of Regulations in the tax period covering August 2022.

 

The Regulations define valuable metal as: any goods containing gold in the form of jewellery, bars, blank coins, ingots, buttons, wire, plate, granules, in a solution, residue or similar forms, including any ancillary goods or services but does not include supplies-

(a)  of goods produced from raw materials by any “holder” as defined in section 1 of the Mineral and Petroleum Resources and Development Act 28 of 2002, or by any person contracted to such “holder” to carry on mining operations in respect of the mine where the “holder” carries on mining operations;

(b)  contemplated in section 11(1)(f),(k) or (m) of the Act;

 

And residue is defined as: any debris, discard, tailing, slimes, screening, slurry, waste rock, foundry send, beneficiation plant waste or ash.

 

The Regulations furthermore a.o. provide regulations regarding:

-   Responsibilities of the supplier of valuable metal, being a registered vendor;

-   Responsibilities of the recipient of valuable metal, being a registered vendor;

-   Additional requirements for tax invoices;

-   Additional requirements for credit and debit notes;

-   Additional reporting requirements in VAT returns;

-   Liability for VAT; and

-   Transitional measures.

 

The text of the Regulations on domestic reverse charge relating to valuable metal, issued in terms of section 74(2) of the Value-Added Tax Act, 1991 (Act 89 of 1991) as published in the South African Government Gazette can be found here.

 

The accompanying Explanatory Memorandum can be found here.

 

 

 


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