Amendments to the VAT Act – Output tax on contingent consideration

This amendment is aimed at avoiding the time of supply being triggered for the full consideration in respect of transactions where the ultimate value of the supply cannot be determined up-front. This rule already previously existed for the supply of goods. It has now been extended to the supply of services.

The new rule will apply to instances where the ultimate price of the service is determined by some unknown future event, for example exchange rates, commodity process, etc.

The time of supply rules for such supplies of services is now deemed to be the earlier of:

The extent to which payment is received; or

The extent to which an invoice has been issued for the supply. 

Information courtesy of:  LexisNexis South Africa

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