The National Treasury has announced amendments to the Value-Added Tax (VAT) Act, 1991, specifically targeting transactions involving valuable metals such as gold.
The changes, published in the Government Gazette on 10 May 2024, modify the domestic reverse charge (DRC) mechanism for valuable metals and update related definitions and compliance criteria.
Key Changes in Definitions and Regulations
The term “valuable metal” has been redefined to include a broad range of products, including gold in various forms such as jewellery, bars, ingots, and even waste materials from mining. It now specifically excludes items such as gold-plated jewellery, where gold is a minor constituent, or goods with less than 1% gold by gross weight.
The regulations introduce stricter record-keeping standards for VAT-registered suppliers and recipients. These include maintaining detailed descriptions of valuable metals and the percentage of gold content. Debit and credit notes must also meet additional criteria beyond standard VAT requirements.
Effective Date and Scope
The revised regulations are retroactive to 1 January 2024. This means all VAT applications and transactions involving valuable metals since this date must adhere to the new rules. Jewellers must focus on maintaining accurate records and clear documentation of gold content when working with suppliers and manufacturers.
Industry Impact
The updated VAT regulations are expected to have significant implications for the jewellery industry, particularly for jewellers dealing in gold and other precious metals. The new compliance requirements, particularly regarding gold content and detailed records, may increase administrative tasks. Jewellers handling gold products or involved in resale will need to ensure they follow the changes to avoid non-compliance.
