SARS Snapshot: Key Highlights for May 2024

June 5, 2024 Eszter Rapanos

SARS GENERAL MATTERS

1. Trade Statistics – April 2024

In April 2024, South Africa achieved a preliminary trade balance surplus of R10.5 billion, driven by exports totalling R169.5 billion against imports of R159.1 billion. For additional insights, visit the Trade Statistics webpage or read the full media release here.

On a year-on-year basis, export flows for April 2024 (R169.5 billion) were 4.2% higher compared to R162.7 billion recorded in April 2023, whilst import flows were 0.8% higher having increased from R157.8 billion in April 2023 to R159.1 billion in the current period.

2. Tax Workshops and Mobile Tax Unit Schedules

The tax workshop schedule for Limpopo, North West and Mpumalanga during June 2024 has been published.

Mobile tax units will be available during June 2024 in the Western Cape, Eastern Cape and Mpumalanga. Click here to see the services and documents you need to take.

3. New Scam alert

New scams are doing the rounds talking of refund payments and supporting documents for eFiling. DO NOT OPEN the links and delete the emails immediately. Examples of these scams were published on our Scams & Phishing webpage.

4. Business Rescue Email Address

The Business Rescue email address changed to businessrescue@sars.gov.za on 1 May 2024. Any notices relating to business rescue sent after 30 April 2024 to the old email address (sarsdebtmanagement2@sars.gov.za) will not be acknowledged or accepted.

5. SARS Annual Performance Plan for 2024 -2025

The SARS Annual Performance Plan (APP) 2024/25 document contains key objectives to enhance efficiency and compliance, focusing on leveraging technology through the SARS Modernisation Programme to support voluntary tax compliance and improve public trust. It promotes a seamless taxpayer experience under the "Tax Administration 3.0" framework, aims to increase revenue through strategic compliance interventions, and commits to strengthening organizational capabilities and leadership. Detailed information can be accessed on the Annual reports & Strategic plans webpage.

6. Upgraded Trust Dispute System

Trusts can now submit tax disputes and related documents electronically through eFiling or at SARS branches, replacing the ADR1 and ADR2 alternative dispute resolution forms. The new enhancements for Trusts will entail the submission of disputes through eFiling or by visiting a SARS branch. However, Trusts with disputes initiated before this date must still resolve them manually.

LEGAL MATTERS

7. Binding General Ruling (BGR) 14 – VAT treatment of specific supplies in the short-term non-life insurance industry

BGR 14 defines terms relevant to the insurance industry such as "bordereau", and "inbound and outbound insurance policy," and clarifies the roles of insurers and intermediaries. It clarifies the VAT implications on insurance-related transactions, particularly after recent amendments in the VAT Act that address specific areas like the time of supply and tax obligations on various insurance-related services and indemnity payments.

The key rulings regarding VAT treatment in the short-term non-life insurance industry:

Time of Supply: An insurance policy or related document that does not obligate payment does not trigger the time of supply. The supply is deemed to occur when the premium is received.
International Transport Insurance: Zero-rate applies to insurance for goods or passengers in international transport, including ancillary services like storage.
Stock Throughput Insurance: Insurance for goods transported internationally is zero-rated. For goods within South Africa, zero rate applies only if linked to international transport.
Hull Insurance: Insurance for foreign-going ships or aircraft can be zero-rated if supplied directly to a non-resident non-vendor.
Insurance for Property in Export Countries: Zero-rating applies to insurance for both fixed and movable property located in export countries.
Indemnity Payments: Clarifies VAT on indemnity payments, distinguishing between monetary settlements and payments to third-party suppliers for goods or services reinstatement.
Excess Payments: No input tax deduction is allowed for excess payments, and these do not trigger VAT unless they are part of a taxable insurance claim.
Recoveries: Insurers do not need to account for VAT on recoveries from third parties under subrogation claims.
Group Personal Accident Insurance: VAT deductions are applicable for employers on the insurance payments where they act as principals. No VAT obligations arise when acting as agents for employees.
Intermediary Services: Zero-rating may apply to intermediary services related to international transport or hull insurance if provided to non-resident non-vendors.
Tax Invoices and Documentation: Specific documents can serve as tax invoices or notes for VAT purposes, reducing administrative burdens.

This BGR applies immediately until it is withdrawn, amended or the relevant legislation is amended. However, paragraphs 3.7 and 3.8 are effective from 1 January 2024.

8. Binding General Ruling (BGR) 70 - Issuing a single section 18A receipt

The South African Revenue Service (SARS) has clarified that Section 18A-approved organisations can issue a single Section 18A receipt to a donor taxpayer for multiple donations made during a year of assessment. This ruling is aimed at simplifying administrative processes for these organisations. The receipt must include the date, amount, and nature of each donation. This approach aligns with the requirements of the Income Tax Act and ensures compliance while reducing paperwork. This ruling is valid from its issue until it is either withdrawn or the relevant legislation is amended. Tax accountants should advise clients accordingly to ensure that all donation receipts meet these requirements for tax deduction purposes.

9. Binding General Ruling (BGR) 71 - Section 18A receipt: donation of property in kind

Binding General Ruling (Income Tax) 71 clarifies the documentation requirements for property donations in kind under Section 18A of the Income Tax Act. The 18A receipt issued for these donations must include a detailed description of the donated property and the monetary value of the donation as determined under specific sections of the Act. This amount is critical for the donor's tax deduction claims and the organisation’s reporting obligations to SARS. This ruling ensures that cash and non-cash donations are accurately documented and reported, aiding in proper tax administration and compliance. The ruling is effective immediately and remains valid until any amendments or withdrawals are made.

10. Binding General Ruling (BGR) 72 – Information on the credit notes for prepaid vouchers

Binding General Ruling (VAT) 72 clarifies the requirements for issuing credit notes for prepaid vouchers in the telecommunications industry. From 1 April 2024, when the nature of the prepaid voucher's supply is fundamentally altered, telecom companies must issue electronic credit notes to prepaid subscribers. These credit notes should include detailed information such as the vendor’s and recipient’s name, address, VAT registration number (if applicable), the date, and the specifics of the adjustment. This documentation is essential for telecom companies to adjust their VAT obligations accurately.

NEW AND UPDATED GUIDES

11. SARS Online Query System (SOQS) update

The SARS Online Query System (SOQS) has been updated to include requests for Penalty Statement of Account and Report SARS Employee Corruption. Taxpayers with compromised eFiling profile can be reported to SARS via SOQS (SARS Online Query System). The GEN-GEN-51-G01 – SARS Online Query System – External Guide from page 9 explains how to report digital fraud and what supporting documentation SARS will need.

12. Curbing efiling fraud

SARS has implemented new measures to prevent fraudulent registration on the eFiling platform. Taxpayers must now provide a valid email and cell phone number, which will be used for security verification through a one-time-pin (OTP). Should these contact details be already in use or exceed maximum usage, the user will receive an error message prompting them to provide alternative information or visit a SARS Branch for help. The relevant guides have been updated:

13. Amended Definition of “Scientific or Technological Research and Development”

Notice 4793 contains amendments to the Regulations in terms of paragraph (d) and (e) of the definition of “scientific or technological research and development” in section 11D(1) of the Income Tax Act relating to:

Adjust the criteria for clinical trials within the scope of "Scientific or Technological Research and Development". These modifications clarify the conditions under which clinical trials qualify for deductions related to scientific or technological research and development, ensuring they meet specified regulatory standards for eligibility.
Specifying additional criteria for multisource pharmaceutical products refining the requirements for these products to qualify for tax incentives related to research and development activities.
Domestic Reverse Charge Relating to Valuable Metal, issued in terms of Section 74(2) of the Value-Added Tax Act.

14. Getting Ready for the Two Pot Retirement System – interim Tax Directives software update

SARS will enhance the Tax Directives process in anticipation of the upcoming two-pot retirement system. The interim changes are detailed in IBIR-006 Tax Directives interim Interface Specification Version 6.702. The revised specification will be published once the law is promulgated. SARS will also communicate trade testing dates in due course.

15. Draft Interpretation Note – Income Tax Exemption: Water Services Provider

The Draft Interpretation Note clarifies the criteria for income tax exemption for water services providers under section 10(1)(t)(ix) of the Income Tax Act. It details the definition and qualifications necessary for entities to be recognised as water services providers, emphasising that these must provide essential water supply and sanitation services to qualify. The note also outlines the exemption's application, ensuring that these entities benefit from reduced administrative tax burdens, supporting their crucial role in managing and providing water services.

Due date for comment: 7 June 2024

CUSTOMS AND EXCISE NEWS

16. Tariff Amendments

The following tariff amendments were published on 10 May 2024:

Notice R.4818 (Implementation date: 10 May 2024): Imposition of provisional payments relating to anti-dumping duties against the alleged dumping of active yeasts originating in or imported from Zimbabwe.

17. Customs and Excise – Tariff Classification

Recent changes to Section 4(3D) of the Customs and Excise Act now require the publication of tariff determinations to help traders correctly classify goods when clearing them. The Tariff Classification documents have been updated to reflect this change. Additionally, the Customs Tariff Classification External Policy and the Excise Tariff Determination Policy have been combined, leading to the withdrawal of the old Excise document, TDN-02. The updated procedures can be found in the revised policy document.

18. Updated facility codes in Box 30

The facility codes used in Box 30 on the Customs Clearance Declaration (CCD) have been updated to include the details of the newly approved container depots.

· Johannesburg – OR Tambo International Airport: ISS Global Forwarding South Africa (Pty) Ltd

· Johannesburg – OR Tambo International Airport: Allport Cargo Services (Pty) Ltd

· Durban: AMG Freight Logistics (Pty) Ltd

19. List of unentered goods

You can find the latest list of unentered goods in state warehouses here.

20. Incorrectly merged profiles

If an entity's profile is incorrectly merged, a request to unmerge can be made at a SARS branch office (appointment required). Once the unmerge is completed, profile access will be updated, and the Recorded Representative must be confirmed. The previous Registered Representative must ensure their eFiling profile is correct and activated to transact successfully at a SARS Branch or via eFiling. Follow the existing procedures to activate the Registered Representative and related profiles, as outlined in the Merge process.

Note: Profiles cannot initiate a merge on eFiling if there is an ongoing unmerge request.

UPCOMING DEADLINES

21. Filing season 2024

Take note of the dates for the 2024 Filing Season for individuals:

Individual taxpayers (non-provisional): 15 July 2024 to 21 October 2024
Auto-assessment notices: 1 – 14 July 2024
Provisional taxpayers: 15 July 2024 to 20 January 2025
Trusts: 16 September 2024 to 20 January 2025

More information will soon be shared on the Filing Season webpage.