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When the Domestic Reverse Charge (DRC) regulations were published it was made very clear that ANY transactions involving “valuable metal” (anything containing gold) between two VAT vendors would be subject to DRC.

The below is quoted from the guide published by the South African Revenue Service (SARS):

For a supply to fall within the parameters of the DRC, the following requirements must be met:

• The supplier must be a registered vendor.
• The recipient must be a registered vendor.
• The supply must be of a “valuable metal” as defined.

DEFINITION OF VALUABLE METAL:
Any goods containing gold in the form of jewellery, bars, blank coins, ingots, button, wire, plate, granules, in a solution, residue or similar forms, including ancillary goods and services.

EXAMPLE OF ANCILLARY GOODS AND SERVICES:
The “valuable metal” goods are packaged in a box and sent by courier. The costs of that packaging and the courier charges would be subject to DRC if they have been charged on the customer invoice.

So even if your main business activities have nothing to do with “valuable metal”, if the transaction goes through the books of a VAT vendor, it is subject to DRC. That business must then advise SARS to re-validate their VAT status by registering for DRC.

For example: Perhaps you operate a gift shop and have a small stand of stud earrings that are gold plated. Whatever the percentage of gold, if you are a VAT vendor and purchased them from us or another VAT vendor supplier, those items would be subject to DRC.

As per the FAQ’s published on the SARS website they have very clearly stated:

1. The quality and content of the gold contained in the good is of no relevance for purposes of the DRC.
2. The DRC applies to any good that contains gold, regardless of the quality, quantity or content of the gold contained in the good.

To register for DRC with SARS is actually a very simple procedure. All you have to do is:

1. Send an email to VATDRCvalidation@sars.gov.za with ONLY your VAT number in the subject line
2. Attach a copy of your VAT registration certificate
3. Attach three months bank statements
4. Attach a list of your “valuable metal suppliers” with their VAT number in excel format
5. In the email state that you have not attached any permit issued by the Regulator as you are not required to have one and that your main business activities are ..…
6. You will receive an automatic reply with a SARS Case Number that acknowledges receipt of the application. In due course you will receive a notice that your VAT status has been re-validated.
7. As a recipient of valuable metal, you are also supposed to send us (as the supplier) a DRC Statement every month. We, however, are able to do this for you under a “self-statement” agreement.
8. The only thing that actually changes is the way qualifying transactions are reported on the VAT return. We are quite happy to walk through this with anyone who needs assistance.

CPM will keep everyone updated if any amendments are made to the legislation or any further interpretations / guidance notes are issued by SARS.

If you would like to take advantage of our “self-statement” agreement, please email our Finance Administrator Shani on drcstatements@cpmct.co.za, or call her with queries 021 551 2066 (ext. 227).