Company A buys a farm from Company B - both are VAT vendors. Does the buyer pay transfer duty to register the property in his company's name and can he claim anything back from VAT in respect of the TD paid?
Important:
This answer is based on tax law year ending 28 February 2018.
Answer:
From the information provided the supply, of the goods (fixed property) will be made by a vendor, registered as such. It will consequently be a ‘taxable supply’. In terms of section 9(15) of the Transfer Duty Act, no duty is payable in respect of the acquisition of any property under any transaction which for purposes of the Value-Added Tax Act, 1991, is a taxable supply of goods to the person acquiring such property. There are certain requirements – see section 9(15).
You mention that the supply qualified for the rate of zero percent. We accept that it was then a supply of a going concern, section 11(1)(e) of the Value-Added Tax Act (and all the requirements – legal and documentary were observed). A supply in respect of which the rate of zero percent applies, is still a taxable supply and the exemption from Transfer Duty will apply.
The deduction if the input tax is the nil – as the tax is zero.