VAT regulation catches industry unawares

MANY industry players
are unaware that
SARS has a socalled
‘special VAT’ rule for
corporates and travellers
staying in accommodation
offerings for a period
exceeding 28 days, whereby
the all-inclusive VAT charge
for accommodation will be
charged at 60% of the normal
VAT rate.
At a recent African
Business Travel Association
breakfast, only one person,
Jennifer du Preez, manager
of Travel and Events at Land
and Agricultural Development
Bank of South Africa, was
aware of the special VAT rule.
“I only became aware of
this regulation earlier this
year,” said Jennifer.
The VAT regulation was
part of the Tax Act and
non-compliance would have
implications for the supplier,
she said.
According to the special
VAT regulation, companies
will be charged 60% of the
total VAT on an all-inclusive
charge for accommodation
and any domestic goods and
services when a traveller
stays for an unbroken
period of 29 days or more.
If a traveller stays for
28 days or less, VAT is
charged at the full rate,
according to the VAT 411
– Guide for Entertainment,
Accommodation and Catering,
which is found on the
SARS website.
An accommodation
establishment may be
notified of the 29-day or
more unbroken stay at the
beginning or end of the
period. In this case, the 60%
rate will be applied from the
first day of accommodation.
Where payments have
already been made and VAT
has been calculated on the
full all-inclusive charge, an
adjustment will be made and
a credit note will be issued
to correct the charge, the
guide explains.
When there is an initial
agreement between the
accommodation supplier
and corporate for the
guest to stay longer than
28 days, but the traveller
vacates the accommodation
before the 29th day, the
accommodation supplier will
be responsible for making
the necessary adjustments
so that the special rate does
not apply.
“A company that has not
been billed 60% of the VAT
amount on their traveller’s
all-inclusive stay can ask
the accommodation provider
for an updated invoice.
The company has a fiveyear
period to request an
adjusted invoice,” a SARS
VAT consultant told TNW.
While the special VAT rule
means corporates could save
some money, ABTA founder,
Monique Swart, says it will
not produce savings in the
long-term.
“In the long run, the
corporation will receive
less when they claim VAT
back from SARS.” She
says the special VAT rate
will cause administrative
headaches because
accommodation offerings
such as hotels, B&Bs and
lodges do not have systems
that can bill 60% of the VAT
amount and would have to
do that manually.