The value added tax (VAT) rate is scheduled to increase to 15% (from 14%) beginning 1 April 2018. There are transition rules that apply with respect to the VAT rate increase. However, the transition rules do not determine the “time of supply” (i.e., the moment in time that triggers the taxing event), but consider the timing of specific events in order to determine the rate of VAT to be applied.
What are the transition rules for the rate of VAT on sales of “fixed property”?
In general, with regards to sales of fixed (real) property, the “time of supply” is the earliest of: (1) the time any payment of the consideration is made; or (2) the date of registration in the deeds office. However, the output tax and input tax amounts are generally only payable (or claimable) after the time of supply has occurred, but only to the extent to which payment that discharges the obligation under the purchase price is made in part or in full. In other words, for fixed property sales, VAT is generally accounted for when the payments are made.
The basic transition rules for sales of fixed property provide:
Read a March 2018 report [PDF 225 KB] prepared by the KPMG member firm in South Africa
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