THE VAT/GST GUIDELINES: ITS IMPACT ON SOUTH AFRICA’S VAT 17-18 April / Tokyo, Japan
Scope • Brief introduction to South Africa’s VAT system • Development of the Guidelines • Impact on South Africa • Conclusion 2
Introduction to SA’s VAT system • Part of the new world VAT • Limited exemptions and zero ratings • Based on destination principle • Imports taxed, exports zero rated • No explicit but rather implicit place of taxation rules • No specific distinction between B2B and B2C supplies 3
Development of the Guidelines • SA’s involvement as a Partner country • Importance of government and BIAC representation on task teams • Development of a comprehensive document • Extremely necessary in modern world with complex cross border transactions 4
Impact on South Africa • Issue of neutrality is paramount • Zero ratings achieve this in many instances • But certain limited scenarios where neutrality not achieved • Starting to consider principle of neutrality and how best to achieve it i.e. zero ratings, refunds or registration? 5
Key considerations • Guidelines - the impetus for a relook? • Acknowledgment of SA in global VAT system • Shift in policy? • Ready to accept change? • Loss in VAT revenue but bigger picture? 6
Key considerations • Possible double/non taxation if non alignment with Guidelines • Importance of development of DTAs – SA’s taxation of electronic services is an example of potential double taxation with other jurisdictions – Shows importance of international alignment • Require legislative amendments, approximate 1-2 year implementation 7
Conclusion • Cannot and should not underestimate the importance of the guidelines • Impact on global VAT systems • Its impact on SA’s future development of its VAT cannot be ignored 8
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