What you need to know as a precious metal investor
The regulations on domestic reverse charge relating to valuable metal (“DRC Regulations”) were gazetted by the South African Minister of Finance on 08 June 2022. MetCon will apply the DRC Regulations as of 1 August 2022.
Discover how the DRC Regulations affect your precious metal purchases, and how we wish to ensure your continued ease and convenience of investment.
Why have the DRC Regulations come into effect?
How is ‘valuable metal’ defined?
Does DRC apply to my purchase or sale?
How does this affect sales and purchases of minted bars?
How might this otherwise affect me as a wealth client?
How does this affect MetCon’s buy-back policy?
When do the DRC Regulations come into effect?
Look for the DRC Mark
VAT registered companies are required to pay the VAT on their purchases of valuable metal from VAT registered companies directly to SARS before claiming it back from SARS.
What are the DRC Regulations?
The DRC Regulations are various requirements that must be complied with by valuable metal suppliers and recipients.
Normally, VAT registered companies would be required to pay the VAT on their purchases to their VAT registered suppliers for payment to SARS. They’d then claim back the VAT from SARS. In terms of the DRC Regulations, VAT registered companies are however required to pay the VAT on their purchases of valuable metal from VAT registered companies directly to SARS before claiming it back from SARS.
Why have the DRC Regulations come into effect?
The DRC Regulations are an anti-abuse measure aimed at curbing schemes to claim undue VAT refunds from SARS on goods containing gold. The above process intends to ensure that VAT is only claimed from SARS in instances where it was paid to SARS.
How is ‘valuable metal’ defined?
Valuable metal includes:
- Any goods containing gold in the form of bars, blank coins, granules, jewellery, ingots, buttons, wire, plate, solution or residue.
- Any goods containing gold in similar forms.
- Related goods.
- Related services.
This means that the DRC Regulations will apply to all components of goods in the listed or similar forms that contain gold as well as to accompanying goods and services.
Does DRC apply to my purchase or sale?
DRC applies to standard rated (15% VAT) purchases and sales of valuable metal where the customer and supplier are both registered for VAT.
DRC will not apply in the following circumstances because the customer and supplier aren’t both registered for VAT:
- Valuable metal imports.
- Valuable metal exports.
- Valuable metal sales to the public.
- Valuable metal purchases from the public.
How does this affect sales and purchases of minted bars?
The below stipulations apply to gold products. There is no change to platinum or silver wealth products.
- There is no change to minted bar exports by MetCon i.e. 0% VAT will be included in the payable sales price.
- There is no change to local minted bar sales to non-vendors i.e. 15% VAT will be included in the payable sales price.
- The DRC Regulations apply to local minted bar sales to vendors i.e. 15% VAT will be included in the sales price but the payable amount will exclude VAT.
How might this otherwise affect me as a wealth client?
- All prices for wealth products on wealth.metcon.co.za will still be listed inclusive of VAT, regardless of whether DRC applies or not.
- Payment will be charged at the amount excluding VAT for gold products that are sold to VAT registered vendors.
- MetCon won’t request payment before verifying your VAT registration status.
- MetCon is required to obtain DRC tax statements with regards to all online DRC sales. MetCon will share the DRC statement for inclusion of the VAT period, return reference number and approval by yourself at a later stage.
How does this affect MetCon’s buy-back policy?
Again, the below is with regards to gold products. There is no change to platinum or silver wealth products.
- There is no change to local minted bar buy-backs from non-vendors i.e. 15% VAT will be included in the payable purchase price.
- The DRC Regulations apply to local minted bar buy-backs from vendors i.e. 15% VAT will be included in the purchase price but the payment amount will exclude VAT.
When do the DRC Regulations come into effect?
Application of the DRC Regulations will be compulsory from 1 August 2022 onwards. This means that MetCon will stop paying VAT on valuable metal purchases to VAT registered suppliers and stop collecting VAT from VAT registered customers for valuable metal sales from 1 August 2022.
We wish to ensure your continued ease and convenience of investment and are putting in place all processes to do so.
For any questions, please contact drcqueries@metcon.co.za and we’ll help in any way we can.