South Africa: VAT considerations in light of coronavirus (COVID-19)

South Africa: VAT considerations, coronavirus

Indications from the South African Revenue Service are that taxpayers need to continue to comply with their tax obligations, but that there may be several unusual value added tax (VAT) consequences to be considered.


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VAT-related items to be considered concern:

  • Deposits—whether an amount received is indeed a deposit and, if so, what is the VAT treatment when such deposit is forfeited or applied as consideration for the supply of goods or services
  • Vouchers issued or credits granted for cancellations—whether the voucher is taxable or not, the implications when tendered or forfeited and different forms of credits received for future use
  • Cancellation fees—the rate of VAT to be applied to these charges to customers together with documentary requirements, when relevant (for instance, a local standard rated flight for a non-resident will potentially have a zero rated cancellation fee)
  • Unpaid creditors—the implications of creditors unpaid for a period of more than 12 months (subject to the exceptions) such as certain inter-group transactions
  • Bad debts—the requirements for the relief available for bad debts written off, considering the exceptions to certain inter-group transactions and the potential VAT liability on bad debts subsequently recovered
  • Dealings with the tax authority—the potential implications that new measures will have on VAT registrations, disputes, account queries, ruling applications, delayed refunds, verifications, etc.
  • VAT refunds—if tax authority offices close or there is a significant reduction in staff members, the potential impact on cash flow due to delayed payment of VAT refunds
  • VAT due which the business cannot afford to pay timeously—arranging extended payment terms with SARS due to cash flow restrictions

Read a March 2020 report [PDF 329 KB] prepared by the KPMG member firm in South Africa

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