After an almost six-year battle with SARS, the South African travel industry breathed a sigh of relief when Supreme Court Judge of Appeal, CHG Van Der Merwe, ruled on June 6 that supplementary (override) commission must be zero-rated under s11(2) of the VAT Act.
It was something of a surprise then, to learn that SARS has since back-tracked on the decision to revise the assessments and it is now going to appeal the Rennies case to the Constitutional Court.
Says that agency’s tax attorney: “I presume that they would require permission from the Supreme Court to appeal the case; it is hardly a Constitutional matter.
But now we have to wait again for a definite decision with regard to VAT owing. It sounds as if SARS is desperate – all their work and cost of doing audits on travel agencies down the drain.”
A travel agency manager based in the Eastern Cape told Travel News their agency had been audited for the VAT commission process in 2017.
“Out of the blue, we received an order from SARS to supply all information pertaining to overrides and the result was that we owed SARS a lot of money for VAT not paid on override commissions. I enlisted the help of a tax attorney and he contacted me on June 6 this year to say that he had just had a conversation with the SARS attorney handling the case who said that SARS had conceded the VAT appeal and that he would send us official confirmation in due course and to look out for a new assessment on our VAT status in the next few weeks.”
Otto de Vries, CEO of Asata, says he was gobsmacked at the decision. “The Supreme Court judge made it clear in his ruling that SARS had no case; the appeal decision was handed down in a matter of four weeks. I imagine the Constitutional Court would be loath to get involved in tax matters but we will have to follow the process and wait even longer to finally put this matter to rest and hope that the Supreme Court’s decision holds up.”
