Page 386 - Juta's Indirect Tax

IN 40 (2) VaLue-added tax act: InterPretatIOn nOtes IN 40 (2)
A CCAE/IDZ Operator temporarily removes movable goods from a place in a CCA to a place outside the CCA, but in the Republic (for example, as the movable goods have to be repaired), and those goods are not returned to the CCA within 30 days of being removed from the CCA or within a period arranged in writing with the Controller.
Customs treatment
Imported movable goods – voucher of correction to be processed bringing duty and VAT to account (SAD 500 – A 11-40).
In the case of locally sourced movable goods, there is no Customs treatment – movement of goods in free circulation.
VAT implications for the Supplying Vendor
The Supplying Vendor performing the repair service must levy VAT at the standard rate in terms of s 7(1)(a).
VAT implications for the CCAE
The CCAE/IDZ Operator must process a voucher of correction to bring duty and VAT levied at the standard rate
in terms of s 7(1)(b) to account where imported movable goods are moved out of the CCA. The CCAE/IDZ Operator is entitled to deduct such VAT paid on importation to the extent it quali es as ‘input tax’ as de ned in s 1, subject to sections 16(3)(a)(i), 16(2), and 17 and 20.
The CCAE/IDZ Operator is entitled to deduct the VAT levied on the supply of the services rendered outside the CCA to the extent it quali es as ‘input tax’ as de ned in s 1 subject to sections 16(3)(a)(i), 16(2), 17 and 20. As the imported or locally sourced movable goods are, however, not returned within the required time period (ie 30 days from being removed or a period arranged in writing with the Controller), the CCAE/IDZ Operator is deemed in terms of s 8(24) to have supplied such goods in the course or furtherance of carrying on an enterprise. The supply is in terms of s 9(11) deemed to take place on the last day of the applicable period as contemplated in s 8(24) and the consideration in money is, in terms of s 10(25), deemed to be the open market value of those goods on the last day on which the 30 day period (or the last day of the extended period which was approved by the Controller) expires.
The CCAE/IDZ Operator is entitled to a deduction in terms of s 16(3)(n) equal to the tax fraction of the lesser of the amount contemplated in s 10(25) or the open market value of the goods on the date the goods are subsequently returned to the CCAE/IDZ Operator, or supplied by the CCAE/IDZ Operator after expiry of the time period referred to in s 8(24).
Documentation to be available for VAT purposes for submission to the IDZ Operator at the time the goods exit the CCA:
• The CCAE must complete a VAT267 form when the imported movable goods exit the CCA to record the temporary removal from the CCA for speci c purposes.
• A delivery note, an order or a document to indicate that the imported movable goods are being removed from the CCA in order to perform services in respect thereof.
Documentation to be available for VAT purposes for submission to the IDZ Operator at the time the goods re-enter
the CCA:
• The Supplying Vendor must issue a tax invoice and levy VAT at the standard rate in terms of s 7(1)(a).
• The Supplying Vendor must issue a delivery note or other document indicating that VAT was levied at the standard
rate in order to facilitate the re-entry of the goods into the CCA where a tax invoice is not issued at the time the goods
re-enter the CCA.
• A VAT267 form when the movable goods re-enter the CCA to record the permanent return thereof to the CCA.
5.20 A Vendor permanently moves imported movable goods out of a CCAE Storage Warehouse to the Vendor’s retail outlet situated in the Republic but outside a CCA
Customs treatment
Clearance of goods for home consumption bringing duty to account (SAD 500 – A 11-40).
VAT Implications for the Vendor
The goods must be entered for home consumption as the imported movable goods are being removed from a CCAE Storage Warehouse to a place in the Republic but outside a CCA. The entry of the goods for home consumption by the vendor is subject to VAT at the standard rate in terms of s 7(1)(b).
The vendor is entitled to a deduction of the VAT paid on the imported movable goods to the extent that it quali es as ‘input tax’ as de ned in s 1, subject to sections 16(3)(a)(iii), 16(2)(d), 17 and 20.
Documentation to be available for VAT purposes for submission to the IDZ Operator at the time the goods exit the CCA:
• The vendor must complete a VAT267 form when the imported movable goods exit the CCA.
• A delivery note, an order or a document to indicate that the imported movable goods are being removed from the CCA
to the vendor’s retail outlet outside the CCA in order to facilitate the exit of the goods from the CCA.
5.21 Supply of imported movable goods by a Supplying CCAE Storage Warehouse to a Receiving CCAE Storage Warehouse in the same or a different CCA
Customs treatment
Clearance of goods in bond for removal for re-warehousing (SAD 500 – E 41-41/E 43-40).
Example – Goods temporarily removed and not returned in time
A CCAE removes a facsimile machine, used in the course of making taxable supplies, from the CCA, and delivers it to a supplier in the Republic to be repaired. The facsimile machine is not returned to the CCA within 30 days of its removal. No alternate arrangement is made with the Controller to extend the 30 day period.
The CCAE is liable to account for output tax on the open market value of the facsimile machine, calculated at the end of the 30 day period (or the last day of the extended period which was approved by the Controller). For example, the facsimile machine has an open market value of R1 000. When it leaves the CCA, it is only valued at R500 due to it requiring repairs. At the end of the 30 day period, the open market value is R500 as the facsimile machine has not been repaired. The CCAE has to account for output tax on R500 amounting to R61,40 in the tax period when the 30 day period (or the last day of the extended period which was approved by the Controller) expires.
378 Juta’s IndIrect tax 2016