Las agencias internacionales y sus abonados

The VAT Act makes provision for interest to be remitted or reduced in certain exceptional circumstances. The factors which are taken into account in determining if a remission of interest may be made are different from those which must be considered regarding the remission of a non- compliance penalty or USP as discussed in paragraphs 10.4.1 and 10.4.2.

Before 1 April 2010, the factors which were considered in deciding whether interest could be remitted or not included those which indicated whether there was a loss to the fiscus, or if the vendor benefitted financially by not paying the VAT on time. With effect from 1 April 2010 the Commissioner’s discretion to remit interest was limited so that it is now based on whether or not the payment of tax was made within time as a result of circumstances beyond the vendor’s control. An example of this is when a vendor’s payment instruction could not be carried out by the vendor’s bank in time because of a failure in the banking system. Refer to Interpretation Note 61 dated 29 March 2011 “Remission of Interest” for an explanation of the law before and after 1 April 2010.

Section 270(6B) of the TA Act regards this requirement as having been met for the purposes of considering the remission of the USP if the return was submitted before 1 October 2012.

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Section 223(3) of the TA Act. 91

VAT 404 – Guide for Vendors Chapter 10 Currently, if you wish to have your case for the remission of interest considered, a written request must be submitted to the SARS office at which you are registered once you have paid any tax which is due. Note that the remission of interest will only be considered where substantive reasons are given for a late payment. This means that properly motivated mitigating circumstances must be submitted for consideration together with any evidence which supports your case for the remission of interest. As all the relevant mitigating and aggravating factors must be considered by the Commissioner when making a decision in this regard, a failure to submit adequate reasons will mean that there will be no basis upon which the Commissioner will be able to exercise any discretion in the matter. The mitigating circumstances and evidence which you submit to support your case should therefore demonstrate to the Commissioner’s satisfaction that the circumstances which lead to the late payment or non-payment of VAT were beyond your control.

Once the interest provisions under the TA Act become operational, a senior SARS official must be satisfied that the interest payable by a vendor was caused by circumstances beyond the vendor’s control in considering an application to remit any interest charged. Only the following circumstances may be considered to be beyond the vendor’s control:

• A natural or human made disaster.

• A civil disturbance or disruption in services.

• A serious illness or accident.

CHAPTER 11

FARMING

This chapter focuses on a few of the VAT implications which are unique to farming enterprises.

11.1

TAX PERIODS

It is a common misconception that all farmers may be, or are required to be registered on Category D (six-monthly or bi-annual tax period). This is not true as this category is only available to fairly small scale farming enterprises.

Vendors who qualify for the Category D tax period must meet the following criteria:

• The enterprise must consist solely of agricultural, pastoral or farming activities.

• The total turnover from all farming activities must not exceed R1,5 million per consecutive period of 12 months.

A vendor may also qualify for Category D if a separately registered branch or division of the enterprise consists solely of agricultural, pastoral or farming activities, provided that the vendor’s other enterprises, branches or divisions do not also consist of those same activities. Generally, vendors will want their six-monthly tax periods to coincide with their provisional tax period. For this reason, vendors who are sole proprietors will be allocated a tax period which ends at the end of February and August. Other legal entities may choose to end its tax period on any two other months which are six months apart (for example, March and September).

Should the value of taxable supplies exceed R1,5 million in any consecutive period of 12 months, the Commissioner will allocate either a Category A or B tax period to the vendor (two-monthly tax period). If the value of taxable supplies exceeds R30 million per consecutive period of 12 months, the vendor will be obliged to pay over the VAT and submit monthly returns per Category C tax period. As from 1 May 2011 all vendors falling within a Category C tax period must submit their returns in electronic format and make payments electronically via eFiling. Section 25 of the VAT Act requires a vendor who is a farmer to notify SARS once the total value of taxable supplies exceeds R1,5 million in a 12- month period.