Demystifying the value-added tax effects of foreign branches in South Africa: The Wenco case

• Citation: (2023) 35 SA Merc LJ 123
• DOI: https://doi.org/10.47348/SAMLJ/v35/i2a1
• Published date: 26 March 2024
• Pages: 123-137
• Author: Soni, F.
• Date: 26 March 2024

Articles

DEMYSTIFYING THE VALUE-ADDED TAX

EFFECTS OF FOREIGN BRANCHES IN

SOUTH AFRICA: THE WENCO CASE

FAEEZA SONI*

CA (SA), Senior Lecturer, School of Accountancy,

University of the Witwatersrand

Abstract

The application of South African value-added tax (VAT) principles to

transactions involving foreign branches is challenging. A recent

judgment made in Wenco International Mining Systems Ltd &

another v CSARS (59922/2019) [2021] ZAGPPHC 70 brought the

uncertain applications of the VAT Act to the forefront. An awareness

of the uncertainties could guide policymakers to improve the legislation

and assist tax professionals who advise their clients. This research

adopts a qualitative approach and traditional legal doctrinal

methodology. It proposes amendments to the legislation. I question the

application of s 8(9) of the VAT Act because proviso (ii) of the

definition of ‘enterprise’ separates the activities of foreign branch or

foreign main business from those of the vendor. It is unclear if a foreign

branch or foreign main business is treated as a separate ‘person’ in the

VAT Act, with all the accompanying powers of another ‘person’. The

proviso is also unclear about whether it applies only if the foreign

branch or foreign main business makes supplies ‘for consideration’. It

is unclear whether s 11(1)(i) and 11(2)(o) should apply, as opposed to

s 11(1)(a) and 11(2)(l).

Keywords: Wenco case, South African VAT, foreign branch, foreign main

business, enterprise

*BAccSci HDip Acc MCom (Acc) (Wits).

123 https://doi.org/10.47348/SAMLJ/v35/i2a1

(2023) 35 SA Merc LJ 123

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