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Domestic Reverse Charge on Valuable Metal in the Pipeline

June 9, 2022

National Treasury

Regulations on domestic reverse charge relating to valuable metal have been drafted.

National treasury published the Regulations in Government Gazette 46512 in terms of the Value-Added Tax Act.

In an earlier statement, treasury pointed out that the Regulations introduce a Domestic Reverse Charge Mechanism and “apply in respect of supplies of defined valuable metals between vendors, and make provision for the purchasing vendor to declare and pay to SARS the VAT charged on the acquisition of defined valuable metals and claim the input tax thereon, within the same tax period or within 12 months after the end of the tax period in which the tax invoice was issued”.

The Regulations prescribe additional requirements for the tax invoice, administrative matters as well as additional responsibilities for both the supplying vendor and the purchasing vendor.

“Valuable metal” is defined as any goods “containing gold in the form of jewellery, bars, blank coins, ingots, buttons, wire, plate, granules, in a solution, residue or similar forms, including any ancillary goods or services”.

According to the Regulations, “domestic reverse charge” means the VAT charged at the standard rate on a taxable supply of goods, must be accounted for and is payable, on the supplier’s behalf, by the recipient of the supply and is not payable by the supplier if the supply is of valuable metal; supplier is a registered vendor; and the recipient is a registered vendor.

The Regulations focus on responsibilities of the supplier of valuable metal, being a registered vendor; responsibilities of the recipient of valuable metal, being a registered vendor; additional requirements for tax invoices; additional requirements for credit and debit notes; additional reporting requirements in VAT returns; liability for VAT; transitional measures and re-validation of VAT registration status under Chapter 3 of the Tax Administration Act.

The Domestic Reverse Charge Regulations come into effect on 1 July 2022.