An Adviser Must Obtain the Consent of its Client to a Section 206(3) Transaction Before Settlement of the Transaction IA-1732 is effective on (insert date of publication in the Federal Register ).ДЇOR FURTHER INFORMATION CONTACT: Douglas Scheidt, Associate Director and Chief Counsel, Karrie McMillan, Assistant Chief Counsel, or Eileen Smiley, Senior Counsel, 202/942-0660, Mail Stop 5-6, Division of Investment Management, 450 Fifth Street, N.W., Washington, D.C.

The second interpretive position in Release No. IA-1732 is effective on (insert date 60 days after publication in the Federal Register ). The first interpretive position in Release No. IA-1732 is added to the list in Part 276 as of July 17, 1998. The second interpretive position identifies certain transactions for which an adviser would not be acting as broker within the meaning of Section 206(3).ДATES: Release No. The first interpretive position identifies the points at which an adviser may obtain its client's consent to a principal or agency transaction. Section 206(3) prohibits any investment adviser from engaging in or effecting a transaction on behalf of a client while acting either as principal for its own account, or as broker for a person other than the client, without disclosing in writing to the client, before the completion of the transaction, the adviser's role in the transaction and obtaining the client's consent. SUMMARY: The Securities and Exchange Commission ('Commission') is publishing two interpretive positions under Section 206(3) of the Investment Advisers Act of 1940. IA-1732) INTERPRETATION OF SECTION 206(3) OF THE INVESTMENT ADVISERS ACTOF 1940ДЄGENCY: Securities and Exchange Commission Interpretation of Section 206(3) of the Investment Advisers Act of 1940 SECURITIES AND EXCHANGE COMMISSION 17 CFR Part 276 (Release No. Our attorneys in Johannesburg and Cape Town are available to answer any further questions related to section 54 of The VAT Act South Africa.ДЇor legal assistance with matters related to the relationship between an agent and a principal with regards to VAT, please contact us.SEC Interpretation: Sec. Van Deventer & Van Deventer Incorporated вЂ“ Attorneys in Cape Town and Johannesburg In these cases, documents are generally issued directly to the agent and the principal will expect to receive these documents from the agent and not the third party. However, there are practicalities to keep in mind in such cases when a third-party deals with an agent, the third party is often unaware of the principal on whose behalf the agent is acting. In the same way, when an agent makes supplies on behalf of the principal, the agent may issue the principal with a tax invoice as if it had made the supply and levied output tax. Therefore, when taking these stipulations into consideration, the agent will never join the VAT chain of transactions.ДЄccording to section 54 and as far as invoices are concerned, when an invoice is issued to the agent by the supplier, and not directly to the principal, the principal may still use the invoice to claim input tax deduction. The same applies when an agent make a supply on behalf of its principal who is a registered VAT vendor the supply for VAT purposes is deemed to be made directly by the principal. Section 2 of 54 indicates that any VAT supply made by a VAT vendor through an agent is deemed to have been made directly to the principal. Therefore, the question is whether the agent can become a link in the VAT chain? In other words, can the agent claim input tax on the invoices received from the supplier of services or goods?ДЄdditionally, can the agent raise its own invoice to its client in order to charge output tax? Section 54 of The VAT Act South Africa This could cause problems from a VAT perspective because the agent will typically be required to issue or be issued with a VAT invoice which is in fact intended for the client itвЂ™s acting on behalf of. Principal vs Agent Tax According to Section 54 of The VAT Act South Africa

In other words, the agent merely facilitates transactions and is not legally a party to the transaction.

In situations where an agent acts on behalf of their client, the services rendered or goods purchased are not intended for the agentвЂ™s personal benefit or gain.ДЄs per the contract, the services rendered and goods purchased are done directly by the agentвЂ™s client, through the channels created by the agent.

In this case, the term вЂњagentвЂќ is used to refer to a relationship that exists between a principal (VAT registered clients) and an agent (person or company who acts on behalf of the client). Section 54 of The VAT Act South Africa has been included in order to govern the practical problems faced when goods or services are supplied to and from VAT vendors via agents.

Acting principal definition