Browsing by Author "Zulch, Hendriette"
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- ItemSouth African Value-Added Tax: Place of supply rules for cross border supplies of services – a comparative analysis with Chapter 3 of the OECD’s International VAT/GST Guidelines(Stellenbosch : Stellenbosch University, 2017-12) Zulch, Hendriette; Van Heerden, L.; Stellenbosch University. Faculty of Economic and Management Sciences. School of Accountancy.ENGLISH SUMMARY : The international norm is that Value-Added Tax (VAT) is a destination-based, consumption-type system that levies VAT on a supply in the destination of consumption. Some jurisdictions have explicit place of supply rules in their VAT legislation to determine the jurisdiction of consumption and consequently, the jurisdiction where the supply should be taxed. The South African VAT Act, does not contain such explicit place of supply rules, but has inferred place of supply rules interwoven into the various provisions. Due to the increase in international trade, the OECD recognised that place of supply rules should be consistent between jurisdictions to ensure that unintentional non-taxation or double taxation does not occur. The OECD developed a set of recommended rules to determine the place of taxation for cross border supplies of services and intangibles which are described in Chapter 3 of the International VAT/GST Guidelines. The purpose of this research study was to determine whether the inferred place of supply rules in the VAT Act and the aforementioned recommended rules in the OECD Guidelines are in harmony, and to make remediation recommendations where it found not to be in harmony. For purposes of this research paper, the outcome of the rules were considered in different scenarios of cross border supplies for the following types of services: - massage services - construction services - consulting services - subscription services to a web application The research methodology followed was non-empirical research to identify and summarise the recommended rules in the OECD Guidelines and the inferred place of supply rules in the VAT Act. Furthermore, a comparative analysis was conducted by applying these rules to different scenarios of cross border supplies and comparing the results. It was found that the outcome of the recommended rules in the OECD Guidelines and the inferred place of supply rules in the VAT Act are in harmony in respect of cross border supplies of massage services and construction services. The outcome were not in harmony in the following scenarios for consulting services and subscription services to web applications: - Where a vendor (resident or non-resident supplier of consulting services or resident supplier of subscription services to a web application) supplies services to a non-resident customer who is in South Africa at the time that the services are rendered. - Where a vendor (resident or non-resident supplier of consulting services or resident supplier of subscription services to a web application) supplies services to a resident customer, but the services are physically rendered outside South Africa. - Where a non-resident non-vendor supplier supplies services to a resident customer and the services are utilised or consumed outside South Africa (in a foreign jurisdiction). In order to ensure that unintentional non-taxation or double taxation does not occur where services are rendered between South Africa and foreign jurisdictions, the inferred place of supply rules in the VAT Act should be amended to render an outcome which is in harmony with the recommended rules in the OECD Guidelines. Recommendations were made on how the VAT Act can be amended to achieve such harmony.