Since 10 January 2012 developers have enjoyed the relief provisions of section 18B of the Value-Added Tax Act (“the Act”) which allow them to temporarily let residential property, whilst continuing to hold it as stock in trade, without the deemed 'change in use' provisions of section 18(1) of the Act applying.
In terms of the current provisions of the Act, section 18B will be of no force and effect from 1 January 2015. This would expose developers to output VAT being levied on the market value of the property as the property would be deemed to have been supplied by way of a taxable supply, if it is let for residential purposes.
Section 111 of the 2014 Taxation Law Amendment Bill however comes to the aid of developers and proposes that the relief afforded in terms of section 18B shall remain in effect up to 31 December 2018.
This relief provided should however be approached cautiously whilst it is still in the form of a Bill as certainty on the above provision will only be obtained once the Bill is promulgated.
CONTACT REFQAH FATAAR HO-YEE at firstname.lastname@example.org ; tel 021 673 4700 / 082 782 7771