ENS Tax In Brief - Issue 146 - Sales Taxes: VAT, GST

Below, please find issue 146 of ENS' tax in brief, a snapshot of the latest tax developments in South Africa.

case law

IT 35476 [2025] ZATC JHB (25 February 2025)
- The taxpayer appealed additional assessments issued by the Commissioner for the South African Revenue Service ("Commissioner" or "SARS") which treated a large loan account (and interest thereon), owing to him by one of his wholly owned companies, as undeclared income. The taxpayer argued the amounts were capital, not income, and presented reconstructed financial statements to support this. SARS contended that the taxpayer gave inconsistent explanations and failed to provide direct evidence for the source of funds.
- The court found the taxpayer's explanations unreliable, noted the absence of key witnesses and supporting documents, and accepted SARS' expert criticism of the reconstructed financial statements. The court held the taxpayer failed to discharge the burden of proof, required under section 102(1) of the Tax Administration Act, 2011 ("TAA"), dismissed the appeal, confirmed the assessments, imposed a 25% understatement penalty, and ordered payment of interest and costs.
- Find a copy of the judgment here.
VAT 22504 [2025] ZATC JHB (7 March 2025)
- SARS challenged the taxpayer's zero-rating of liquor exports, asserting that the taxpayer failed to provide sufficient documentary proof of export as prescribed by the Value-Added Tax Act, 1991 ("VAT Act") and the Customs and Excise Act, 1964 ("Customs and Excise Act").
- The taxpayer contended it had supplied direct exports and complied with the relevant law. However, SARS disputed whether the logistics arrangements, which involved transport agents, satisfied the statutory requirements. During the ensuing litigation, SARS invoked both the Tax Court Rules ("TCR") (particularly rules 10(4), 36, and 42(1)) and the Uniform Rules of Court (specifically rules 30A(2), 35(3), 35(7), and 35(12)) to obtain discovery of documents referenced in the taxpayer's TCR 32 statement of grounds of appeal ("TCR 32 statement").
- Although the taxpayer partially complied, it subsequently objected to further discovery, claiming that SARS' applications for discovery were premature and amounted to a fishing expedition.
- The court rejected these objections, holding that SARS was lawfully entitled to obtain all documents referred to in the taxpayer's TCR 32 statement. In finding that the taxpayer's belated compliance followed by resistance was an abuse of process, the court underscored the complementary nature of the TCR and the Uniform Rules of Court in ensuring proper disclosure. Consequently, the court ordered the taxpayer to produce the outstanding documents.
- Find a copy of the judgment here.
IT 46151 [2025] ZATC BFN (14 April 2025)
- The taxpayer intended to amend its TCR 32 statement and requested that SARS agree thereto in terms of TCR 35(1). SARS declined to agree to the proposed amendment, prompting the taxpayer to make an application to the Tax Court in terms of TCR 52(7) and requesting for condonation for lodging the application after 20 days of SARS' decline, as was required under TCR 50(4).
- The court found that the taxpayer failed to provide a comprehensive and reasonable explanation for the delay, did not address the merits or prospects of success, and thus did not meet the "good cause" requirements to make out a case for condonation. Additionally, the proposed amendments were procedurally and substantively deficient, including attempts to withdraw admissions without proper justification and to introduce issues outside the scope of the current appeal.
- The court dismissed the application in its totality.
- Find a copy of the judgment here.
45840 [2025] ZATC CPT (15 April 2025)
- In the context of a transfer pricing dispute between the taxpayer and SARS, SARS sought to amend its TCR 31 statement of grounds of assessment ("TCR 31 statement") to include an expert report supporting a different method (Profit Split Method) for determining arm's length pricing, instead of the original method (Comparable Uncontrolled Pricing). The taxpayer argued this would change the factual basis of the assessment, which is not allowed without issuing revised assessments.
- The court found that the method used to determine the arm's length price is not part of the factual or legal basis of the assessment, but simply a tool for quantification. The amendment did not amount to a novation or require revised assessments. SARS was granted leave to amend its TCR 31 statement.
- Find a copy of the judgment here.
VAT 22315 [2025] ZATC JHB (25 April 2025)
- This case concerned whether a clearing agent for the taxpayer was entitled to claim a value-added tax ("VAT") input tax refund of R26,901,845.85 paid on gold coins imported by the taxpayer from the United Kingdom.
- The court examined whether the clearing agent could claim the input VAT as a representative taxpayer or responsible third party under sections 153 and 158 of the TAA, and whether the VAT on importation was levied for section 13 of the VAT Act.
- The court held that, in terms of section 54(2A)(a) of the VAT Act, only the taxpayer, as the principal and importer, was entitled to claim the VAT refund, not the clearing agent.
- The court further found that the importation was completed when the goods were entered for home consumption, as evidenced by the customs documentation, and that the subsequent export of the coins was a separate transaction.
- The appeal was dismissed, the assessment confirmed, and the appellant (clearing agent) was ordered to pay costs.
- Find a copy of the judgment here.
Standard Bank of South Africa v South African Reserve Bank (047643/2023) [2025] ZAGPPHC 481 (15 May 2025)
- This judgement concerns an order by the South African Reserve Bank ("SARB") regarding the forfeiture of funds held in accounts linked to Leo Cash and Carry (Pty) Ltd ("Leo"), following suspicions that the company had used its accounts to facilitate large-scale cryptocurrency transactions that might contravene South Africa's Exchange Control Regulations.
- Standard Bank, which held a money market account for Leo, challenged the forfeiture, arguing that the current Exchange Control Regulations do not regulate cryptocurrencies as either "money" or "capital".
- The court held that cryptocurrencies are not recognised as "money" or "capital" under the existing regulatory framework. As a result, the court set aside the forfeiture of funds in Standard Bank's money market account, holding that the Exchange Control Regulations do not currently extend to cryptocurrencies. Find a copy of the judgment here.

legislation and draft legislation

Public Notices 2025
- Notice in terms of section 25 of the TAA, read with section 66(1) of the Income Tax Act, 1962 ("ITA"), for submission of income tax returns for the 2025 year of assessment.
- The persons that must submit income tax returns, as well as the dates for submission of the returns, are specified in the notice.
- Find the notice here.
Response Documents
- The Final Response Document on the 2024 Draft Revenue Laws Amendment Bill, 2024 Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill, 2024 Draft Taxation Laws Amendment Bill, 2024 Draft Tax Administration Laws Amendment Bill, Global Minimum Tax Bill and Global Minimum Tax Administration Bill, have been published.
- Find the final response document here.
Explanatory memoranda
- National Treasury issued the following explanatory memoranda:
ITA | Tables of Interest Rates
- Table 3 – Rates at which interest-free or low-interest loans are subject to income tax.

SARS publications

Minister of Finance delivered the national budget speech
- The Minister of Finance announced a challenging revenue estimate of R1.986 trillion for the 2025/26 financial year, against the backdrop of a final unaudited revenue outcome of R1.86 trillion for 2024/25. The global economic growth outlook has been revised downwards, impacting local economic assumptions and reflecting a weak outlook for major trading partners and domestic structural issues.
- SARS will accelerate efforts to collect all debt, with a specific focus on undisputed debt, to meet the revenue estimate. This includes recruiting and training over 800 new employees for debt collection, leveraging insights from third-party data sources
- SARS is refining and using advanced data analytics and artificial intelligence to detect tax-compliance risks, close the tax gap, and improve compliance rates. Efforts include combating the illicit economy in high-revenue sectors and broadening the tax base by identifying and registering individuals and businesses operating outside the formal tax system.
- Find more information here.
Government Connect Newsletter
- The latest SARS Government Connect Newsletter (Issue 28) for May 2025 was published.
- The newsletter provides information on:
- Simplifying tax compliance for both taxpayers and third-party data providers.
- Functionality of SARS' Online Query System ("SOQS").
- The Corporate Income Tax guide has been updated.
- How and where taxpayers can update their banking details.
- Help-U-eFile has been decommissioned.
- Find a link to the Newsletter here.
Updated guide | Withholding Tax on Royalties Return ("WTR01")
- Effective 25 April 2025, taxpayers are encouraged to submit WTR01 declaration forms, along with supporting documents, via the SOQS on SARS' website.
- Taxpayers who still prefer to use email may continue to do so via the relevant mailboxes for the Large Business & International and High Wealth Individual Taxpayer segments.
- Find the updated guide here.

advance tax rulings

Draft binding general ruling ("BGR") 4 for public comment | municipality apportionment method
- The draft BGR 4 relates to the apportionment methodology to be applied to a municipality.
- It is open for comment until 20 June 2025.
- Find the draft BGR 4 here.
VAT ruling ("VR") 010 | Apportionment
- This ruling approves the method of apportionment being a varied input-based method, which is applied to the Applicant that is a South African short-term insurance company operating in the field of domestic and international credit insurance. The Applicant provides domestic and international trade credit insurance cover to its policyholders who sell goods or provide services to other businesses on credit terms in order to protect them against non-payment risks.
- Find a copy of the ruling here.
VR 011 | Apportionment
- This VAT ruling approves the method of apportionment being the varied turnoverbased method, which is applied to the Applicant a South African Real Estate Investment Trust, which is listed on the Johannesburg Stock Exchange in the Real Estate Holdings and Development Sector.
- Find a copy of the ruling here.
VR 012 | Apportionment
- This ruling approves the method of apportionment, being the varied turnoverbased method, which is applied to the Applicant that is a holding company for a group of companies which operate in the electronics and low-voltage electrical engineering industries.
- Find a copy of the ruling here.
VR 013 | Zero-rating of medical insurance cover
- This ruling confirms that the premiums charged by the Applicant (an insurer that provides short-term insurance cover) as consideration for the provision of medical health cover to the employees of foreign employers and the dependents of the employees who are located in a foreign country, in the event of medical emergencies, where the foreign employer contracts with the Applicant as principal, qualify for VAT at the rate of zero per cent in terms of the provisions of section 11(2)(l) of the VAT Act.
- Find a copy of the ruling here.

exchange control

The South African Reserve Bank has published Exchange Control Circular No. 8/2025 which relates to the appointment of Kastelo Africa (Pty) Limited as an Authorised Dealer in foreign exchange with limited authority.
- Find a copy of the circular here.

customs and excise

Customs and Excise Act, 1964 | Tariffs amendments
- The following amendments have been published in the Government Gazette 52750
  - Notice R.6234 – Imposition of provisional payment in relation to antidumping duties against the alleged circumvention of the anti-dumping duties on new pneumatic tyres of rubber of a kind used in motor cars, classifiable under tariff subheadings 4011.10.01, 4011.10.03, 4011.10.05, 4011.10.07 and 4011.10.09 and on buses or lorries, classifiable under tariff subheadings 4011.20.16, 4011.20.18 and 4011.20.26 through country hopping originating in or imported from the People's Republic of China via the Kingdom of Cambodia, the Kingdom of Thailand, and the Socialist Republic of Vietnam (ITAC Report No. 748).
  - Notice R.6233 – Amendment to Schedule No. 1, by the substitution of paragraph 1 of General Note O, to include The Gambia as part of the State Parties in the African Continental Free Trade Area Agreement.

international | OECD

Organisation for Economic Co-Operation and Development ("OECD") | Transfer Pricing Country Profile Update
- The OECD has published updated transfer pricing country profiles reflecting the current transfer pricing legislations and practices of 11 jurisdictions and issued for the first time the profiles of Azerbaijan and Pakistan. These latest country profiles present country-specific information on the transfer pricing treatment of hard-to-value intangibles and the simplified and streamlined approach for baseline marketing and distribution activities.
- Find more information here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ENS Tax In Brief - Issue 146

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