The Value-Added Tax Act, 1991, is being amended in terms of legislation to be tabled in Parliament today to take account of the fact that where a vendor who is registered on the invoice basis disposes of fixed property, serious cash flow disadvantages may arise. The issue of an invoice or the receipt of any portion of the purchase price, no matter how small, will trigger a VAT liability in respect of the full selling price. Often months or even years may go by before the vendor has received enough cash to pay the VAT liability.
Where the purchaser is a vendor who is registered on the invoice basis, he will be able to claim an input tax deduction far in excess of any amount laid out. This has led to the development of schemes to abuse the system.
In the light of the above it has been decided to provide that in respect of sales of fixed property concluded on or after 6 June 1996-
The Commissioner for Inland Revenue
P O Box 402
Ms K R Seidel
Tel: (012) 315-5336
Fax: (012) 325-6006