23 Aug Precious Metal Bars and VAT
Precious Metal Bars and VAT
There seems to be a lot of confusion regarding VAT on precious metal bars. In this short article, I will attempt to clear up some of the confusion regarding this matter.
When you buy Kruger rands, no VAT is payable. Kruger rands are 22-carat gold (not pure) and capital gains tax apply. When you buy pure precious metal bars you will have to pay VAT which makes bars more expensive per weight than Krugers. This is actually incorrect as I will explain now. Bars also carry capital gains tax.
When buying precious metal bars there are 2 possibilities. Buying as a private person or buying in a company name where you have a VAT number. If you buy as a private person you pay VAT when you buy and when you sell back the bar you will get the buy back price plus the VAT as per the value at the time of selling. This VAT law has just changed about a week ago. It only comes into effect in the 2017 tax year. So, you have to keep your bar until after March 2017. If you buy in a company name you will get charged VAT as normal. You then claim the VAT back from SARS as per your monthly return. When you sell the bar the company will get paid the buy back price plus the VAT. The company will then pay this VAT over to SARS as per usual on the monthly return. The only condition the manufacturer has for buying back the bars is that it must still be in the original packaging.
Precious metal bars are unique in that only a limited number of businesses has a license to sell bars in South Africa. For many years bars could not be owned by the public. It is only in the last couple of years that pure precious metal bars are offered to the general public.
Some very interesting information on gold.