The Domestic Reverse Charge Regulations (DRC Regulations) came into effect in July 2022 and information on this topic is available on the VAT Domestic Reverse Charge webpage the Frequently Asked Questions (FAQs) as well as the article “Domestic Reverse Charge Regulations” in VAT Connect 14.
Suppliers and recipients that are existing registered VAT vendors and that are currently involved in buying and selling valuable metal must re-validate their registration status with SARS. See the to VAT Domestic Reverse Charge webpage under “What must be done?” for further details on the validation process.
It is noted that some vendors do not declare DRC supplies and purchases in the correct fields on the VAT 201 return. Supplies subject to the DRC must be accounted for by the supplier, at the VAT-exclusive amount of the valuable metal in Field 3 of the VAT201 return. The recipient of valuable metal must account for the VAT on the acquisition thereof in Field 12 of the VAT 201 return. The recipient will then also be entitled to an input tax deduction which must be claimed by reflecting the VAT so declared in Field 18 of the VAT 201 return. The supplier of valuable metal must not show the VAT component on DRC supplies it made on the VAT 201 return for relevant the tax period. It has been noticed that some suppliers have erroneously declared output tax on their DRC supplies in Field 18 of the VAT 201 return. Field 18 relates to input tax deductions, so by making this mistake, the supplier would have overstated their deductions and understated their VAT liability for the tax period. As a result, that shortfall will be subject to penalty and interest. See Questions 19 and 23 to 25 of the FAQs for further information on declaring DRC-related transactions on the VAT 201 return.
As mentioned in VAT Connect Issue 14, a dedicated mailbox was created to specifically deal with questions on the DRC Regulations. This mailbox will be closed with effect from 31 August 2023 as enquiries in this regard have reduced substantially.
Source: gov.za
