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Value-Added Tax Act, 1991 (Act No. 89 of 1991)

Part II - Value-Added Tax

10. Value of supply of goods or services

 

(1) For the purposes of this Act the following provisions of this section shall apply for determining the value of any supply of goods or services.

 

(2) The value to be placed on any supply of goods or services shall, save as is otherwise provided in this section, be the amount of the consideration for such supply, as determined in accordance with the provisions of subsection (3), less so much of such amount as represents tax: Provided that—
(i) there shall be excluded from such consideration the value of any postage stamp as defined in section 1 of the Post Office Act, 1958 (Act No. 44 of 1958), when used in the payment of consideration for any service supplied by the postal company as defined in section 1 of the Post Office Act, 1958;
(ii) where the portion of the amount of the said consideration which represents tax is not accounted for separately by the vendor, the said portion shall be deemed to be an amount equal to the tax fraction of that consideration.

 

(3) For the purposes of this Act the amount of any consideration referred to in this section shall be—
(a) to the extent that such consideration is a consideration in money, the amount of the money; and
(b) to the extent that such consideration is not a consideration in money, the open market value of that consideration.

 

(4) Where—
(a) a supply is made by a person for no consideration or for a consideration in money which is less than the open market value of the supply; and
(b) the supplier and recipient are connected persons in relation to each other; and
(c) if a consideration for the supply equal to the open market value of the supply had been paid by the recipient is not he would not have been entitled under section 16(3) to make a deduction of the full amount of tax in respect of that supply,

the consideration in money for the supply shall be deemed to be the open market value of the supply: Provided that this subsection shall not apply to the supply of a benefit or advantage of employment contemplated in section 18(3).

 

(4A) For the purposes of this Act, where any share in a share block company is supplied, the consideration in money for that supply shall include the amount of any allocation, delegation or transfer referred to in section 8(17).

 

(5) Where goods or services are deemed to be supplied by a vendor in terms of section 8(2) or (9), the supply shall be deemed to be made for a consideration in money equal to the lesser of—
(a) the cost to the vendor of the acquisition, manufacture, assembly, construction or production of such goods or services, including—
(i) any tax charged in respect of the supply to the vendor of such goods or services or of any components, materials or services utilized by him in such manufacture, assembly, construction or production;
(ii) where such goods or any right referred to in section 8(2), when held by the vendor, constituted trading stock as defined in section 1 of the Income Tax Act, any further costs (including tax) incurred by him in respect of such goods or right as contemplated in section 22(3)(a) of that Act;
(iii) any costs (including tax) incurred by the vendor in respect of the transportation or delivery of such goods or the provision of such services in respect of such goods  that are consigned or delivered or the provision of such services as contemplated in section 8(9); and
(iv) where such goods or services were acquired under a supply in respect of which the consideration in money was in terms of section 10(4) deemed to be the open market value of the supply or would in terms of that section have been deemed to be the open market value of the supply were it not for the fact that the recipient would have been entitled under section 16(3) to make a deduction of the full amount of tax in respect of that supply, such open market value to the extent that it exceeds the consideration in money for that supply; or
(b) the open market value of such supply.

 

(5A) [Subsection (5A) deleted by the Taxation Laws Amendment Act, 2011 (Act No. 24 of 2011)].

 

(6) For the purposes of this Act, where goods are supplied under an instalment credit agreement, the consideration in money for the supply shall be deemed to be the cash value of that supply.

 

(7) Where goods or services are deemed by section 18(1) or 18B(3) to be supplied by a vendor, the supply shall, subject to the provisions of subsection (8), be deemed to be made for a consideration in money equal to the open market value of such supply.

 

(8) Where any repairs, maintenance or insurance in respect of a motor vehicle is deemed to be supplied by a vendor by section 18(1), such supply shall be deemed to made for a consideration in money equal to the cost (including tax) to such vendor of acquiring such repairs, maintenance or insurance: Provided that where such vendor does not maintain accurate data for the purposes of calculating such consideration in money, such supply shall be deemed to be made for a consideration in money equal to the amount determined in the manner prescribed by the Minister in the Gazette for the category of motor vehicle concerned.

 

(9) Where goods or services are deemed by section 18(2) to be supplied by a vendor, the supply shall be deemed to be made for a consideration in money determined in accordance with the formula

 

A x (B - C)

 

in which formula—

 

"A" represents the lesser of—

(i)
(aa) the adjusted cost (including any tax forming part of such adjusted cost) to the vendor of the acquisition, manufacture, assembly, construction or production of those goods or services: Provided that where the goods or services were acquired under a supply in respect of which the consideration in money was in terms of section 10(4) deemed to be the open market value of the supply or would in terms of that section have been deemed to be the open market value of the supply were it not for the fact that the recipient would have been entitled under section 16(3) to make a deduction of the full amount of tax in respect of that supply, the adjusted cost of those goods or services shall be deemed to include such open market value to the extent that it exceeds the consideration in money for that supply;
(bb) where the vendor was at some time after the acquisition of such goods or services deemed by section 18(4) to have been supplied with such goods or services, the amount which was represented by "B" in the formula contemplated in section 18(4) when such goods or services were deemed to be supplied to the vendor; or
(cc) where the vendor was at some time after the acquisition of the goods or Services required to make an adjustment contemplated in section 18(2) or (5), the amounts then represented by "A" in the said formula or by "B" in the formula contemplated in section 18(5) respectively, in the most recent adjustment made under section 18(2) or (5) by the vendor prior to such deemed supply of goods or services; and
(ii) the open market value of the supply of those goods or services at the time any reduction in the extent of the consumption or use of the goods is deemed by section 18(6) to take place;

 

"B" represents the percentage that the use or application of the goods or services for the purposes of making taxable supplies was of the total use or application of such goods or services determined under section 17(1), section 18(4) or (5) or this subsection, whichever was applicable in the period immediately preceding the 12 month period contemplated in "C"; and

 

"C" represents the percentage that, during the 12 month period during which the decrease in use or application of the goods or services is deemed to take place, the use or application of the goods or services for the purposes of making taxable supplies (in respect of which, if such goods or services had been acquired at the time of such use or application, a deduction of input tax would not have been denied in terms of section 17(2)(a)), was of the total use or application of the goods: Provided that where the percentage contemplated in "B" does not exceed the said percentage by more than 10 per cent of the total use or application, the said percentage shall be deemed to be the percentage determined in "B".

 

(10) Where domestic goods and services are supplied at an all-inclusive charge in any enterprise supplying commercial accommodation for an unbroken period exceeding 28 days the consideration in money is deemed to be 60 per cent of the all-inclusive charge.

 

(11) Where a service is under section 8(4)(b) deemed to be supplied, the consideration in money for the supply shall be deemed to be an amount equal to the amount retained or recovered as contemplated in that section.

 

(12) Where any supply of goods is a supply which would, but for the proviso to section 11(1), be charged with tax at the rate of zero per cent, the consideration in money for that supply shall be deemed to be an amount equal to the purchase price of those goods to the supplier: Provided that in any case where the deduction of input tax referred to in that proviso has been made by any other person (where that supplier and that other person are connected persons), the consideration in money for that supply shall be deemed to be an amount equal to the greater of the purchase price of those goods to that supplier and the purchase price of those goods to that other person: Provided further that for the purposes of this subsection, the purchase price of any goods shall not be reduced by any amount of input tax deducted under section 16(3) by the supplier or, as the case may be, any other person where the supplier and that other person are connected persons.

 

(13) Where goods or services are deemed to be supplied by a vendor under section 18(3), the consideration in money for the supply shall be deemed to be an amount equal to the cash equivalent of the benefit or advantage granted to the employee or office holder, as contemplated in section 9(7): Provided that where such benefit or advantage consists of the right to use a motor vehicle as contemplated in paragraph 2(b) of the Seventh Schedule to the Income Tax Act, the consideration in money for the supply shall be deemed to be the amount determined in the manner prescribed by the Minister in the Gazette for the category of motor vehicle used.

 

(14) Where services are or are deemed by section 8(5) to be supplied to any public authority or municipality by any vendor the consideration in money for such supply shall be deemed to be the amount of any payment made from time to time by the public authority or municipality concerned to or on behalf of the vendor as contemplated in the said section.

 

(15) [Subsection (15) deleted by the Amendment of Taxation Laws Act Act No. 9 of 2006].

 

(16) Where a supply of goods is deemed by section 8(10) to be made by that debtor, the consideration in money for that supply shall be deemed to be an amount equal to the balance of the cash value of the goods (being the cash value thereof applied under subsection (6) in respect of the supply of the goods to the debtor under the said agreement) which has not been recovered on the date on which the supply of the goods by the debtor is deemed by section 9(8) to be made: Provided that the said balance shall be deemed to be the amount remaining after deducting from the cash value so much of the sum of the payments made by the debtor under the said agreement as, on the basis of an apportionment in accordance with the rights and obligations of the parties to the said instalment credit agreement, may properly be regarded as having been made in respect of the cash value.

 

(17) Where a service is deemed by section 8(13) to be supplied to any person, the consideration in money for such supply shall be deemed to be the amount that is received in respect of the bet.

 

(17A) Where a service is deemed by section 8(13A) to be supplied to any vendor, the consideration in money for such supply shall be deemed to be the amount that is received as a prize or winnings.

 

(18) Where a right to receive goods or services to the extent of a monetary value stated on any token, voucher or stamp (other than a postage stamp as defined in section 1 of the Postal Services Act, 1998, and any token, voucher or stamp contemplated in subsection (19)) is granted for a consideration in money, the supply of such token, voucher or stamp is disregarded for the purposes of this Act, except to the extent (if any) that such consideration exceeds such monetary value.

 

(19) Where any token, voucher or stamp (other than a postage stamp as defined in section 1 of the Postal Services Act, 1998) is issued for a consideration in money and the holder thereof is entitled on the surrender thereof to receive goods or services specified on such token, voucher or stamp or which by usage or arrangement entitles the holder to specified goods or services, without any further charge, the value of the supply of the goods or services made upon the surrender of such token, voucher or stamp is regarded as nil.

 

 

(20) Where any token, voucher or stamp is issued by any vendor for no consideration and the holder thereof is entitled on surrender thereof to another person, being the supplier of goods or services, to a discount on the price of goods or services supplied to the holder, the consideration in money for the supply of such goods or services shall be deemed to include the monetary value stated on such token, voucher or stamp: Provided that such monetary value shall be deemed to include tax.

 

(21) Where any supply of entertainment is made by a vendor and in terms of section 17 no deduction of input tax was made in terms of section 16(3) in respect of the acquisition by the vendor of goods or services for the purpose of such entertainment, the value of such supply shall be deemed to be nil.

 

(21A) A Where any supply of medical or dental services or other goods or services is made as contemplated in section 17(2)(d) by a scheme referred to in that section, the value of such supply shall be deemed to be nil.

 

(22) Where a taxable supply is not the only matter to which a consideration relates, the supply shall be deemed to be for such part of the consideration as is properly attributable to it.

 

(22A) Where any supply is made which comprises the management of a superannuation scheme as contemplated in section 2(1)(i), the consideration in money for such supply shall be deemed to be the greater of the cost of making such supply or any consideration for such supply.

 

(22B) Where any supply of goods is deemed to be made as contemplated in section 8(20), the consideration in money for such supply shall be deemed to be the total amount of the value placed on the importation in terms of section 7(1)(b).

 

(23) Save as otherwise provided in this section, where any supply is made for no consideration the value of that supply shall be deemed to be nil.

 

(24) Where a game viewing vehicle or a hearse is deemed to be supplied by a vendor in terms of section 8(14)(b) or (14A) the supply shall be deemed to be made for a consideration in money equal to the open market value, of that game viewing vehicle or hearse.

 

(25) Where any goods are deemed by section 8(24) to be supplied to any person, the consideration in money shall be deemed to be the open market value of those goods on the date contemplated in section 9(11).

 

(26) Where a service is deemed to be supplied under section 8(27), the consideration in money for the supply shall be deemed to be the excess amount contemplated in that section.

 

(27) Where any supply of goods or services is deemed to be made in terms of section 8(19), the value of such supply shall be deemed to be nil.

 

(28)        Where a supply of goods is deemed to be made as contemplated in section 8(29), the value of such supply shall be deemed to be nil.

[Subsection 28 inserted by section 80(1) of Act No. 17 of 2017-commences April 2018]