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South Africa Abolishes Stamp Duty

by Robert Lee,, London

03 April 2009

The South African Revenue Service (SARS) has announced the abolition of the Stamp Duty Act with effect from midnight on March 31, 2009.

According to SARS, the abolition forms part of the on-going efforts to reduce the administrative burden on taxpayers and to simplify the tax system.

The scrapping of the Act (77 of 1968) follows the whittling down of the scope of stamp duties over the past few years until only property leases of over five years required stamp duties to be paid. This has now been done away with from April 1, 2009.

The scrapping of the Act is, however, not retrospective and taxpayers remain liable for stamp duties due up to March 31, 2009 and any outstanding stamp duties must still be paid.

Adhesive revenue stamps will only be demonetarized from November 1, 2009 to allow time for other government departments which utilize these to introduce alternative measures. After that date they may not be used for any purpose.

Holders of existing stocks of revenue stamps have until October 31, 2010 to claim a refund. Similarly, revenue franking machines will be scrapped on November 1, 2009 and any value remaining on these machines can be refunded until October 31, 2010.

Procedures for the claiming of refunds were published in a government Gazette on March 27, 2009.

Stamp duty is an indirect tax charged on an instrument – which in this context means a formal legal document and includes any written document or piece of writing. The Stamp Duties Act 77 of 1968 levied this duty on instruments such as leases of immovable property and unlisted marketable securities. However, it was not the name by which an instrument is known, but its legal nature that determined whether it was an instrument that attracted duties. And the type of instrument determined the rate at which the duty was charged.

An instrument was subject to stamp duty if it was executed in South Africa or if the instrument was executed outside the country but related to any property or matter there. It was the duty of the taxpayer to determine whether stamp duty must be paid.

From January 1, 2005, stamp duty was imposed at 0.5% of the quantifiable amount of a lease.

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