Page 519 - Juta's Indirect Tax

BGR 014 VALUE-ADDED TAX ACT: BinDing gEnErAL rULingS BGR 014
(b) Supply of related intermediary services
The Commissioner directs, in terms of sections 20 (7) and 21 (5), that the bordereau or commission statement* issued by the intermediary to the short-term insurer in respect of the supply of intermediary services does not have to contain the words ‘tax invoice’, ‘credit note’ or ‘debit note’, as the case may be.
2.3 Recipient-created tax invoices, credit and debit notes
Short-term insurers who are required to determine the consideration payable in respect of intermediary services may, in terms of sections 20 (2) and 21 (4), issue recipient-created tax invoices, credit or debit notes in respect of the supply of intermediary services. This is conditional on –
• the recipient-created tax invoice, credit or debit note issued must comply with sections 20 (4), (5) or 21 (3) as
applicable. However, if 2.2 (b) of this BGR is applicable, the bordereau or commission statement issued by the short- term insurer in respect of intermediary services does not have to contain the words ‘tax invoice’, ‘credit note’ or ‘debit note’, as the case may be; and
• short-term insurers complying with all other requirements listed in Interpretation Note 56 ‘Recipient-Created Tax Invoices; Credit and Debit Notes’.
2.4 International transport policies
The supply of short-term insurance in respect of international transport services† [that is, transport services that are zero- rated in terms of section 11 (2) (a), (b) or (c)] may be zero-rated in terms of section 11 (2) (d).
Short-term insurers may zero rate the supply of short-term insurance in respect of international transport services in instances where the short-term insurance agreement is entered into before the supply of international transport services. The zero-rating is conditional on the short-term insurer –
• obtaining proof con rming, within 90 days of the date the supply of international transport services occurs, that these
services were zero-rated;
• accounting for output tax (that is the provisions of section 64 are applicable) if the short-term insurer fails to obtain
the aforementioned proof within the said 90 day period in the tax period during which the 90 day period ends; and
• include as an adjustment in eld 18 of its VAT201 the amount declared as output tax in sub-paragraph (ii), in the tax period during which the documentation is received. This is only applicable if the required documentation is received
within 5 years calculated from the date of the time of supply of the short-term insurance.
The aforementioned is equally applicable to the supply of arranging short-term insurance in respect of international transport services.
2.5 Marine insurance
Marine insurance supplied directly to a person, and not through an agent or other person, who is not a resident of South Africa and not a vendor may be zero-rated in terms of section 11 (2) (h) (ii) to the extent the insurance policy covers the loss to a ‘foreign-going ship’ as de ned in section 1 (1).
To the extent that marine insurance includes insurance cover in respect of goods transported from a point in South Africa to a destination in an export country or vice versa, the supply of such short-term insurance is zero-rated in terms of section 11 (2) (d) [refer to paragraph 2.4].
2.6 Hull and associated liability
The supply of short-term insurance, being hull insurance, falls within the ambit of the operation or management of a ‘foreign-going aircraft’ or ‘foreign-going ship’ as de ned in section 1 (1). As a result, the supply of hull insurance directly to a person, not through an agent or other person, who is not a resident of South Africa and not a vendor may be zero-rated in terms of section 11 (2) (h) (ii) to the extent the insurance policy covers the loss to a ‘foreign-going aircraft’ or ‘foreign-going ship’. The temporary presence of the ‘foreign-going aircraft’ or ‘foreign-going ship’ in South Africa will not impact on the zero-rating of the supply.
Short-term hull insurance supplied to a resident of South Africa does not fall within the ambit of section 11 (2) (h) (ii) and is therefore subject to VAT at the standard rate in terms of section 7 (1) (a).
2.7 Policies issued in respect of xed property situated in an export country
Short-term insurance supplied directly in connection with land, or any improvement thereto, situated in an export country, is subject to VAT at the zero rate in terms of section 11 (2) (f).
2.8 Policies issued in respect of movable property situated in an export country
Short-term insurance supplied directly in respect of movable property situated in an export country at the time the short- term insurance service is rendered, is subject to VAT at the zero rate in terms of section 11 (2) (g) (i) [that is, the movable property must be situated in an export country during the period for which the insurance cover is provided].
2.9 Excess payments
(a) Insured pays excess directly to third party supplier
* A bordereau or commission statement is a document which stipulates the amounts collected on behalf of the short- term insurer as well as the fees payable in respect of intermediary services supplied.
† International transport policies include stock through-put, goods in transit and travel coupon cover.
Juta’s IndIrect tax 2016 511