UNDER A section of the draft revenue laws amendment bill, the commissioner for SA Revenue Service (SARS) is to zero-rate the supplies of certain goods entered into a customs and excise (C&E) warehouse. According to PriceWaterhouseCooper’s “Customs Matters”, the second proviso to Section 13(1) of the value-added tax (VAT) act - where goods have been imported and entered into a licensed C&E warehouse, but not entered for home consumption - means that any sale of such goods is disregarded for VAT purposes. Under both treatments - zero-rated and disregarded - the sale does not result in any VAT liability for the seller, said the report. “However,” it added, “treating the sale as zero-rated means that the supplier makes taxable supplies of the goods with the following possible consequences: l If not already registered as an SA VAT vendor, these supplies render the supplier liable for VAT registration if he regularly makes such supplies and the total consideration for these supplies exceeds R300 000 per year or is likely to exceed this amount. The supplier becomes entitled to voluntary registration if the consideration exceeds R20 000 per year. l Once registered the supplier can claim back most of the VAT incurred in the course of making these taxable supplies free.”
