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Uæwdl Œive

Prèr0żè 8šg X187

Rtvońiś 2128

Telaphóne(011ł g0Z-2Œł0 SAR4 oriłinø. yew.sars.ge‘z.za

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Attention: Thavøn Pèiumal / JP Noríje

(402ô106d19).- APPORTIOßIBENT FORMULA
I writø with refereričø to your făcøímłle dated 10 June 2tØ5, receivsd by me on D6 July 2005.

BAGKQRÖUND
The facts æe understood to be as follows:

t. Wtd applied the turnover-based method to calculate ïts apportion«ænt

ratio doing thø pest ńvë years.

Thø apportiòrroent ratio currently in uæ was calculated in 2000 snd

WM was uńaware of"Ïha availability of the input-based method and ttæ lad tł›at it ğvës ø much more accurate reftectan of the extent to which goods and services be. applied by a municipality for the

5. WM is requesting a.directive confirming that they be permitted to uæ the adjusted ïnpüt-based mothod of appoctionmønt with effect from July 2000.

THE LAW

For eaefi of rsfsrence 1 quöta the foüowir›g sections frnm the Act:

APPMCATtONOF TRIE LAW

In terms of section 17(1) wtiere a vendor accpirss goods or services that de intands to use orily partly” for maI‹ing taxabts suppties, de ís required to appoftion the input fax inúurred. In other words, input tax may be claimed amy fc the extent ”to. which the gooós or services are acqutred for the purposes of making taxabla supplies.

Any VAT, in terms of section 1 definition “input tax” incurred on the acquisition of goods or services which is Identified as relating wholly to the use, consumption or supply for aithsr taxable or r›omtaxab/e purposes is referred ta as being uf@//y af/r/buted to that kind of suppty or activity. Alternatively, VAT \n«urrad on the acquisition of goods or services which cannot be wholly attñbuted to.either taxable or non-taxable activities, tnat is idsmifisa as relating to.the use, consawpi?on cr supply in the.coursa of both