The object of the exercise, according to the Treasury, is to explore possible alternatives, and to address the complications that arise from the interaction between these three Acts.

The Treasury is seeking comments on administrative, compliance or any other problems being experienced with the various taxes on fixed property transactions in South Africa, and particularly on the interaction between the VAT Act and the Transfer Duty Act, and proposals to eliminate or minimise these problems.

It is also asking for suggestions for alternative approaches with regard to interrelationship between current taxes on immovable properties.

Transfer Duties on the acquisition of fixed property, together with Stamp Duties, have been on the statute books since early in the previous century. These indirect taxes are some of the earliest form of transaction taxes in South Africa. With the introduction of VAT in 1991, concerns arose that the imposition of VAT and Transfer Duties/Stamp Duties on the same transactions would result in double taxation.

Provisions were therefore created in the VAT Act and Transfer Duty Act to legally impose only one of these taxes on any given transaction. However, the Treasury's consultation notes that the attempt to remove double taxation has in certain incidences had the effect of eliminating tax totally on certain property transactions that were previously subject to Transfer Duty.