Sage, a leader in cloud business management solutions, today announced that it has added functionality to its Sage 50 and Sage Business Cloud Accounting software that makes it simple for small and medium enterprises (SMEs) to comply with domestic reverse charge (DRC) regulations (as published by the National Treasury) for VAT on valuable metals.
This aligns with Sage’s commitment to helping businesses streamline their operations through automation, ensuring seamless adherence to tax regulations and actively combatting widespread VAT fraud and avoidance prevalent in the gold trade.
The Regulations are an anti-abuse measure aimed at foreclosing schemes and malpractices to claim undue VAT refunds from SARS by vendors operating in the value chain relating to high-risk goods containing gold, for example, gold, gold bars, gold granules or jewellery (“valuable metal”).
With DRC VAT, the recipient (a VAT-registered customer) in a valuable metals transaction must report and pay the VAT on the sale to the South African Revenue Service (SARS). The recipient can only claim an input VAT deduction for the transaction if it has declared and paid the tax in its VAT 201 return. The regulations apply to VAT-registered companies on all supplies of valuable metals.
Says Motumi Tsoeute, Senior Compliance Specialist at Sage Africa and Middle East: “Compliance is one issue that keeps SME accountants awake at night. We aim to ease the burden for our clients by reducing duplicated work, eliminating human error, and improving the accuracy of critical compliance processes such as the DRC regulation. SMEs can rest easy because we update our software as soon as new regulations, or changes to regulations come into effect.”
To comply with the regulations, which came into effect in August 2022, suppliers need to indicate the VAT DRC value the recipient must pay on their invoice. Corresponding debit and credit notes should share the same detail. The recipient, in turn, must issue VAT DRC statements to the supplier that indicate how it has paid SARS on behalf of the supplier.
This means that:
- The liability to account for, and pay the VAT charged by the supplier on a transaction involving valuable metal will shift from the supplier to the recipient.
- The recipient will be entitled to an input tax deduction only if the VAT amount levied by the supplier has been declared and paid in the recipient’s VAT 201 return.
- Supplier invoices must indicate the VAT DRC value payable by the recipient. Corresponding Debit and Credit notes will share the same detail.
- The recipient will have to issue VAT DRC statements to the supplier indicating how much has been paid over on behalf of the supplier.
Viresh Harduth, Small Business Vice President at Sage Africa and Middle East, adds: “Sage continuously focuses on finding ways to help SMEs and their accountants automate more manual processes so that they can spend more time growing their businesses. Automating compliance requirements around valuable metals DRC will save time for SMEs operating in this segment, making it faster and easier for them to file accurate submissions and furthermore reduce malpractice against the SARS.”