South Africa: Doubtful debt allowances

South Africa: Doubtful debt allowances

The South African Revenue Service (SARS) issued a draft interpretation note (February 2020) to address the calculation of doubtful debt allowances.


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Comments on the draft interpretation note were due 15 May 2020.

In general, SARS would not be allowed to use its discretion in determining the doubtful debt allowance claimed by a taxpayer, thereby apparently making it easier to determine these allowances. However, practically determining what doubtful debt allowance would be available to a taxpayer could be more complicated. The wording of section 11(j) and SARS’ interpretation of the law may differ from what is expected practically and what makes sense commercially.

Section 11(j) comprises two main subparagraphs—subparagraph (i) applies to taxpayers that apply IFRS 9 to their debt due for financial reporting purposes and subparagraph (ii) applies to taxpayers that do not apply IFRS 9 to their debt for financial reporting purposes. This raises a number of questions, and there are other concerns noted in view of the draft interpretation note.

Read a May 2020 report [PDF 114 KB] prepared by the KPMG member firm in South Africa

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