As mentioned in the article “Recent Amendments” and “Non-resident lessors of ships, aircraft and rolling stock under a rental agreement” published in VAT Connect Issue 12 the VAT Act was amended to provide that, from 1 April 2021 the supply of ships, aircraft and rolling stock under a rental agreement by a non-resident lessor to a lessee in the Republic is no longer regarded as conducting an “enterprise” in the Republic and is specifically excluded from the definition of enterprise, subject to certain requirements being met.
Whether those requirements are complied with or not is a question of fact and does not require an interpretation of law. Only where all the requirements are met will the supply be regarded as outside the scope of VAT. Non-resident lessors and lessees in the Republic must therefore take care that any such lease agreements meet the specified requirements before treating such supplies as being outside the scope of VAT. A further issue emanating from the said amendment is that if the ship, aircraft or rolling stock concerned is subsequently sold, that supply will similarly not be regarded as a taxable supply made in the course or furtherance of an enterprise conducted in the Republic. That supply, on its own, will also not give rise to a liability for the non-resident lessor to register for VAT. It will therefore not be necessary to apply to SARS for a binding VAT ruling to confirm that outcome.
An amendment has also been proposed to extend the non-enterprise treatment explained above to parts supplied under any rental agreement (for example, aircraft engines) which are directly in connection with the ships, aircraft or rolling stock mentioned above. If accepted, this amendment will only apply from a future date. In the meantime, and until this proposed amendment is promulgated, the Commissioner may not issue any rulings confirming that a vendor making the supplies concerned is not required to register as a vendor.
Source: gov.za
