South African Budget 2017 - VAT, transfer duty and customs & excise

Publication Feb 22, 2017


Value-added tax

Zero-rating of fuel

Government will consider removing the zero-rating on fuel, subject to consultation during 2018/2019. To mitigate the effect on transport costs, government will consider combining this with either a freeze or a decrease in the fuel levy. 

VAT on electronic services

Regulations to the VAT Act are being updated to broaden the scope of electronic services rendered to South African residents which are subject to VAT. Specifically, electronic services will now include cloud computing and services using online application.  The proposed regulatory changes will be published for comment this year.

Clarifying the VAT treatment on lease-holding improvements

Presently, the VAT Act does not provide clear rules on the timing and value of VAT applicable to improvements made by lessees on leasehold property. Amendments are proposed to clarify the VAT treatment of these improvements. 

Amending the definition of “resident of the Republic” for VAT purposes

The definition of “resident of the Republic” will be amended to exclude foreign companies which are effectively managed in South Africa but fall below the threshold to register for VAT. This will enable other VAT vendors to zero rate their supplies to these foreign companies. 

Movable property situated in an export country

There has been some suggestion that securities or shares in a foreign company listed on the JSE constitute movable property which is situated in the foreign country. The potential implication is that services supplied directly in connection with these securities or shares could be zero-rated.  Amendments will be proposed to rectify this anomaly. 

Transfer Duty

The duty-free threshold on purchases of residential property will increase from R750 000
to R900 000 from 1 March 2017.

2016 / 2017

2017 / 2018

Property value (R)

Rate of tax

Property value (R)

 

R0 - R750 000

0% of property value

R0 – R900 000

0% of property value

R750 001 - R1 250 000

3% of property value above R750 000

R900 001 - R1 250 000

3% of property value above R900 000

R1 250 001 - R1 750 000

R15 000 + 6% of property value above R1 250 000

R1 250 001 - R1 750 000

R10 500 + 6% of property value above R1 250 000

R1 750 001 - R2 250 000

R45 000 + 8% of property value above R1 750 000

R1 750 001 - R2 250 000

R40 500 + 8% of property value above R1 750 000

R2 250 001 – R10 000 000

R85 000 + 11% of property value above R2 250 000

R2 250 001 - R10 000 000

R80 500 + 11% of property value above R2 250 000

R10 000 001 and above

R937 500 + 13% of property value above R10 000 000

R10 000 001 and above

R933 000 + 13% of property value above R10 000 000

Customs and Excise

Marking, tracking and tracing of tobacco products

Amendments to the Tax Administration Act relating to the marking, tracking and tracing of locally manufactured and imported tobacco products will be considered as part of the annual budget review.

Review of the diesel refund administration system

The 2015 budget proposed a comprehensive review of the administration of the diesel refund to delink the diesel refund from the VAT system and create a standalone diesel refund administration system. A discussion paper outlining the options for the new administration system was published for comment on 15 February 2017.  Legislative amendments will be developed following public consultation on the discussion paper.

Changes in specific excise duties

Excise duties on –

  • beer, cider and alcoholic fruit beverages will increase by R7.13/litre of absolute alcohol which translates to an increase of around 12c for an average 340ml can;

  • spirits will increase by R13.72/litre of absolute alcohol which translates to an increase of around R4.43 for an average 750ml bottle;

  • fortified wine will increase by 35c/litre;

  • unfortified wine will increase by 30c/litre;

  • sparkling wine will increase by 93c/litre;

  • cigarettes will increase by R1.06/box of 20 cigarettes;

  • cigarette tobacco will increase by R1.19/50g;

  • pipe tobacco will increase by 80c/50g; and

  • cigars will increase by R6.58/23g.


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