Cross border services Tax Indaba 2016

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2 Cross border services Tax Indaba 2016

3 Disclaimer 2014 Grant Thornton South Africa. All rights reserved. Grant Thornton South Africa is a member firm of Grant Thornton International Ltd ("Grant Thornton International"). Grant Thornton International and the member firms are not a worldwide partnership. Services are delivered by the member firms independently. This presentation is an outline for information purposes and should not be relied upon for detailed planning. Readers are advised to consult professional advisors for guidance relating to new or existing legislation which might affect their business and personal decisions.

4 Your presenter Cliff Watson Director

5 Types of cross border services Services physically rendered outside the Republic (section 11(2)(k)) Services supplied in South Africa to a person who is not a resident of the Republic (section 11(2)(l))

6 Services physically rendered outside the Republic Documentary requirements (IN31 (issue 4) 9 March 2016): Tax invoice; Services physically rendered in an export country: i) A copy of the vendor s or the vendor s employee s passport bearing a stamp of entry into the export country; or ii) In instances where a vendor sub-contracts the services to a person situated in an export country, a copy of the contract between the vendor and the subcontracted person situated in an export country; Proof of payment

7 Services supplied in South Africa to a non-resident Services supplied to a person who is not a resident of the Republic, 'resident of the Republic' means a resident as defined in section 1 of the Income Tax Act: Provided that any other person or any other company shall be deemed to be a resident of the Republic to the extent that such person or company carries on in the Republic any enterprise or other activity and has a fixed or permanent place in the Republic relating to such enterprise or other activity; Enterprise or activity without a fixed or permanent place? Certain vendors can qualify to be not a resident of the Republic

8 Services supplied in South Africa to a non-resident not being services which are supplied directly (i) (ii) in connection with land or any improvement thereto situated inside the Republic; or in connection with movable property (excluding debt securities, equity securities or participatory securities) situated inside the Republic at the time the services are rendered, except movable property which (aa) is exported to the said person subsequent to the supply of such services; or (bb) forms part of a supply by the said person to a registered vendor and such services are supplied to the said person for purposes of such supply to the registered vendor; or Directly in connection with?

9 Services supplied in South Africa to a non-resident to the said person or any other person, other than in circumstances contemplated in subparagraph (ii) (bb), if the said person or such other person is in the Republic at the time the services are rendered Incidental presence and incidental benefit Must be a person that derives a direct benefit from the services

10 Requirements for zero rating direct exports Documentary requirements (IN31 (issue 4) 9 March 2016): a) Tax invoice; b) Written confirmation from the recipient that it is not a resident of the Republic; c) Proof of payment; and d) Section 11(2)(l)(ii)(aa): Proof of export (see Table A, Item A); or e) Section 11(2)(l)(ii)(bb): A statement from the non-resident containing the name, address and VAT registration number of that non-resident s local recipient; or f) Section 11(2)(l)(iii): A statement from the non-resident that the non-resident or any other person as contemplated in section 11(2)(l)(iii) is not present in the Republic at the time that the services are rendered.

11 Questions? Cliff Watson

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