Value-added taxation on imported services in South Africa

Abstract

Value-added taxation on imported services is one of the remaining frontiers for Value-Added Tax (VAT) in South Africa. The taxation of imported services remains fraught with different opinions, interpretations and incorrect treatment by both vendors and non-vendors. This is evidenced by recent court judgments on this topic, namely Metropolitan Life v Commissioner for SARS, 2008 (4) SA 558 (C) (70 SATC 162). This study explores whether VAT should be charged on imported services, whether the taxation of imported services is open to misinterpretation, whether there is a significant problem with the technical interpretation of the sections 7(1)(c), 11(2)(k) and section 14(5)(b) of the Act? Has the judgment handed down in Metropolitan Life case brought coherence and clarity to the treatment of imported services? Should the VAT Act be amended to clarify whether section 11(2)(k) applies to imported services and what are the areas of difficulty with imported services that require further research? Data for the study was collected by conducting interviews with a sample of VAT specialists, one official in SARS, one specialist from one of the big law firms, two specialists from two different auditing and accounting firms and Senior Counsel at the Cape Bar. AFRIKAANS : Toegevoedge waarde belasting op ingevoerde dienste is een van die oorblywende uitdagings vir Belasting op Toegevoegde Waarde (BTW) in Suid-Afrika. Die belasting van ingevoerde dienste bly belaai met verskillende menings, interpretasies en verkeerde toepassings deur sowel verkopers as nie-verkopers. Onlangse hofuitsprake oor die onderwerp, veral Metropolitan Life v Commissioner for SARS, 2008 (4) SA 558 (C) (70 SATC 162), is ’n bewys hiervan. Die studie verken of BTW gehef moet word op ingevoerde dienste; of die belasting op ingevoerde dienste oop is vir wanvertolking, en of daar ’n probleem is met die tegniese interpretasie van artikels 7(1)(c), 11(2)(k) en 14(5)(b) van die BTW Wet. Het die uitspraak in die Metropolitan-saak samehorigheid en duidelikheid meegebring in die hantering van ingevoerde dienste? Behoort die BTW Wet gewysig te word om duidelikheid te bring of artikel 11(2)(k) van toepassing is op ingevoerde dienste en wat die probleemareas is met verwysing na ingevoerde dienste wat verdere navorsing verg? Die data vir die studie is ingesamel deur onderhoude wat gevoer was met ’n steekprofiel van BTW- spesialiste, ’n beampte van die SAID, ’n spesialis van een die die groot regsfirmas, twee spesialiste van twee verskillende ouditeursfirmas en ’n Senior Advokaat (SC) van die Kaapse Balie. Copyright 2011, University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria. Please cite as follows: Herbert, NH 2011, Value-added taxation on imported services in SA, MCom dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://upetd.up.ac.za/thesis/available/etd-03222012-165617 / > F12/4/175/gm