Share with your friends

South Africa: VAT and exchange rates and currency fluctuations (COVID-19)

South Africa: VAT and exchange rates, COVID-19

As a result of the financial impact of the coronavirus (COVID-19) pandemic, there have been fluctuations in global currencies including the South African rand. These currency fluctuations may have value added tax (VAT) implications.


Related content

In South Africa, a tax invoice for a supply subject to VAT (at the standard rate of VAT) must be issued in the rand. The South African Revenue Service provides approved exchange rates in Binding General Ruling 11 (BGR 11) for determining the rand equivalent of a supply when a standard-rated invoice is issued in a foreign currency.

BGR 11 provides that a supplier may use one of the following exchange rates (published on the website of the South African Reserve Bank and other resources):

1. The daily exchange rate on the date the time of supply occurs

2. The daily exchange rate on the last day of the month preceding the time of supply, or

3. The monthly average rate for the month preceding the month during which the time of supply occurs

The options listed in (2) and (3) above may not be used in “exceptional circumstances” that result in the rand value being distorted. Examples of exceptional circumstances include the collapse of a foreign currency or a fluctuation in a foreign currency of 10% or more within the month referred to in options (2) and (3). In these instances, the daily exchange rate on the date the time of supply occurs is to be used (that is, option (1) is to be used).

KPMG observation

Given the fluctuation of the exchange rate over the past month may result in “exceptional circumstances” envisaged in BGR11, VAT-registered vendors need to be aware of the risk associated with the application of exchange rates stipulated in points (2) and (3) above, as opposed to the daily exchange rate on the date the time of supply occurs (point (1)).

Read an April 2020 report [PDF 384 KB] prepared by the KPMG member firm in South Africa

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal