Page 377 - Juta's Indirect Tax

IN 40 (2) VaLue-added tax act: InterPretatIOn nOtes IN 40 (2)
6. Output tax adjustment to be made where movable goods, services or xed property are acquired by a CCAE/ IDZ Operator at the zero rate/exempt from VAT on importation and a deduction of input tax would have been denied in terms of section17(2)on such acquisition – section18(10)
7. Conclusion
Preamble
Due to the length of this interpretation note, the complexity of the issues discussed, and supporting legislation, an exposition of the contents is provided below for easy reference.
[For the explanation of abbreviations and acronyms, see para 4 of this document.]
1. Purpose
The purpose of this interpretation note is to set out the VAT implications concerning the various types of supplies of goods or services to and/or from a CCAE/IDZ Operator located in a CCA of an IDZ.
2. Introduction
The Department of Trade and Industry developed an IDZ Programme with the aim of attracting foreign and local direct investment intended to develop the economic potential of speci c geographical areas in the Republic. The IDZ Programme was established in Government Notice R.1224 on 1 December 2000 by the Minister of Trade and Industry in terms of s 10(1) of the Manufacturing Development Act 187 of 1993 by the promulgation of the IDZ Regulations, concerning the regulation, development and operation of IDZs.
In terms of the IDZ Regulations, the Minister of Trade and Industry may, by notice in the Government Gazette, designate a geographical area adjacent to an international harbour or airport, as an IDZ. An IDZ can be described as a geographically designed, purpose-built industrial estate that is linked to an international harbour or airport in an area in the Republic which has been designated by the Minister of Trade and Industry and which contains a delimited fully secured CCA (or multiple CCAs) where CCAEs will operate and obtain certain bene ts and privileges.
An IDZ will be built and operated by an IDZ Operator to whom an IDZ Operator permit was issued by the Minister of Trade and Industry. The IDZ Operator will be responsible for the development, security and maintenance of the IDZ (including the CCA). The IDZ Operator will offer facilities tailored for the manufacture, storage and distribution of goods to boost bene ciation, investment, economic growth and, most importantly, the development of skills and employment in these regions.
The intention is to support these industries with world-class infrastructure, logistics networks and services, including expedited customs procedures coupled with a unique duty-free operating environment.
Within an IDZ, the areas of operation, which are diagrammatically illustrated below, are as follows:
• CCAs, being designated areas within an IDZ which, upon application by the IDZ Operator, have been approved and designated by the Commissioner in concurrence with the Director General: Trade and Industry as CCAs and which have entrance and exit points that are physically controlled by the IDZ Operator who must also provide support
measures and facilities for CCAEs located within the CCA.
- Only CCAEs and IDZ Operators that are licensed and/or registered (as applicable) with SARS: Customs will be
authorised to operate within a CCA and will be permitted to acquire certain goods exempt from the VAT levied on
importation into the Republic, and to acquire certain goods or services from the local market at the zero rate of VAT. - CCAs are controlled by SARS: Customs to the extent that licensing or registration in terms of the Customs and Excise Act is required. In these cases, only the premises where approved enterprise and business activities will be
conducted will be controlled by SARS: Customs.
• The area outside the CCA but within an IDZ (also referred to as the industries and services area), being an
industrial or of ce park type environment surrounding the CCAs and which is occupied by service providers or industries supplying local services or raw materials to CCAEs and IDZ Operators.
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