The Botswana Unified Revenue Services (BURS) has taken action to enforce its articulated position on Value Added Tax (VAT) implications on sales in execution undertaken by deputy sheriffs.
The BURS, through its management, has instituted remedial action to those affected following two court cases that emanated from similar undertakings where deputy sheriffs were made to pay VAT despite not being registered for it.
This led to court cases where finally the matter was settled at the Court of Appeal.
The court, in the matter of attorney Obrien Bvindi versus Commissioner General (CG) of 2016 refereed as Obrien Bvindi case, made it clear that no VAT shall be required in such transactions especially where the deputy sheriff is not registered for VAT. The revenue service was forced to take remedial action to align the operations of the service with that decision of the court by refunding those affected.
“Also, once the VAT refund has been determined and paid, transfer duty becomes due and payable. Therefore it is the responsibility of those who received the refund to deduct duty payable from VAT refund,” reads the letter. Pursuant to the judgement, the BURS CG is now in the process of refunding all those who were required to pay VAT on sales in execution transactions undertaken by deputy sheriffs. This resulted in the revenue making a breakdown of the various permutations on related types of transactions and the manner in which they will treat the matter for VAT purposes.
The position of the revenue in relation to the judgement of the higher court is that VAT was not chargeable on immovable property if sold by a non-registered person, instead transfer duty will be charged on the value
For instance, if a property is sold through an auction pursuant to a writ of execution by the deputy sheriff and they are not registered for VAT, they will not be required to charge VAT on sale and therefore transfer duty would be chargeable on the transfer of that immovable property.
Where the deputy sheriff was registered for VAT then they would be obliged under the law to charge and collect VAT and that no transfer duty would be paid in respect of the property.
“In that case the commissioner general will not require the payment of VAT where the deputy sheriff is not registered for it. However the commissioner may cause an audit of any person to determine whether they were liable to be registered for VAT purposes at the time of the transaction in question,” reads the letter.
Accordingly, if the commissioner is satisfied that the deputy sheriff was required at law to have been registered at the material time, then the transactions following on the date on which he/she has been registered shall be deemed to be VAT inclusive and relevant VAT shall be demanded.
Prior to the judgement, people were required to account for VAT. Now, the commissioner has developed a process to facilitate the applications for refund of VAT for persons/buyers from whom VAT is required and paid, provided the application for refund is made within three years from the date of payment. It is believed that hundreds of thousands of people will probably be refunded.