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Supply of a going concern

Interpretation Note 57 “Sale of an enterprise or part thereof as a going concern” discusses the detailed requirements for a supply to be zero-rated under section 11(1)(e). In terms of that provision, it is a specific requirement that certain aspects must be agreed upon in writing. Applicants should therefore not apply for a VAT Ruling merely to confirm that the agreement meets the necessary requirements in order to treat the supply as a going concern. This is because it is a question of fact whether or not the agreement meets the requirements, as opposed to the interpretation or application of the law based on a set of facts. Also, as SARS has provided comprehensive guidance on the interpretation of the law in respect of a supply of a going concern in an official publication, it is generally not considered necessary to issue a VAT Ruling in this regard, and applications in this regard may be rejected. However, should there be uncertainty about the interpretation or application of section 11(1)(e) in respect of a specific transaction, applicants should clearly illustrate what that uncertainty is, as well as the applicant’s interpretation of the VAT Act in that regard, when an application for a VAT Ruling is submitted.

Source: gov.za

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