With the VAT rate increase on 1 April 2018 drawing near it is important to be informed of the VAT rate which you need to apply to your specific transaction.
As a general rule, the supply of goods or services are deemed to take place at the earlier of:
•    the date upon which a vendor issues an “invoice” (not necessarily a “tax invoice” - an “invoice” in this context is any document notifying an obligation to make payment); or
•    when payment is received by the vendor.
Unless one of the special ‘time of supply’- rules in section 9 of the VAT Act applies, the following will be the general practical position –
•    VAT at a rate of 15% will be accounted for supplies made on or after 1 April 2018. This means that any invoice issued or any payments received/made on or after 1 April 2018 will be levied at a rate of 15%.   
•    If an invoice is issued or payment is made in relation to a supply before 1 April 2018, the supply will be deemed to have been made and VAT at the rate of 14% will apply.

Your immovable property transaction:
If you are in the process of purchasing or selling your immovable property (assuming that it qualifies as “residential property”) or if you are in the business of constructing homes the most important factor is the ‘time’ when the supply is deemed to have been made. The following rules will apply:
•    Section 67A of the VAT Act provides that where goods and services are to be provided or performed, before the date that an increase in VAT becomes effective (1 April 2018), the previous rate will apply to the supply. This is despite the fact or possibility that the actual supply was deemed to take place after the effective date of the increase in terms of section 9 of the VAT Act.
•    If the price of your immovable property was determined or stated in a written agreement which was in force before the effective date of the VAT increase, and the supply is deemed to take place on or after the effective date the VAT rate to be applied to this supply is the “rate at which tax would have been levied had the supply taken place on the date the agreement was concluded.”
In other words, if you entered into an agreement of sale prior to 1 April 2018, you will apply VAT at the “old” rate of 14%.
Estate Agents
The ‘time of supply’ for estate agents’ commission will usually be triggered on the date when an estate agent renders an invoice for commission. The date of conclusion of the contract or the date of registration of the property in the purchaser’s name is therefore not necessarily relevant for VAT purposes unless it coincides with the general time of supply rules (being the earlier of the date of invoicing or payment of the consideration for the supply).
If your practice as an estate agent is to rely on the agreement of sale for payment, it may be argued that the date on which the agreement of sale was concluded will regulate the VAT rate. Thus, if the agreement of sale was concluded before 1 April 2018 even though transfer will occur after 1 April 2018, VAT at 14% will be charged on the agents’ commission.
If, however, an estate agent renders an invoice on the date of transfer of the property, the ‘time of supply’ will be triggered by the invoice and if the date is subsequent to 1 April 2018, despite the fact that the agreement of sale was concluded before that date, VAT at 15% will be charged.
Apportionment issues may arise in the context of estate agents but will not be discussed in this note.
Theo Steyn

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