Author: Varusha Moodaley (Senior Associate at Cliffe Dekker Hofmeyr). An input tax deduction may be claimed when VAT is incurred on goods and services acquired for the purpose of consumption, use or supply in the course of making taxable supplies. The entitlement of a vendor to claim input tax deductions in respect of expenses incurred is generally not disputed where a vendor makes wholly taxable supplies. VAT is therefore generally not considered to be a large component of a businesss cost base as most VAT registered businesses will be entitled to claim a credit or refund of VAT paid to the extent that they conduct an enterprise that makes taxable supplies.
Author: Beric Croome and Gerhard Badenhorst (Tax Executives at ENSafrica). The South African National Treasury indicated in the 2016 Budget Review that there are differing views as to whether the remuneration paid to a non-executive director (NED) is subject to employees tax, that is, pay-as-you-earn (PAYE) and whether a NED should register for value-added tax (VAT). It was suggested that these issues be investigated to provide clarity. In its final response document on the Taxation Laws Amendment Bill, 2016, National Treasury and the South African Revenue Service (SARS) proposed that SARS address the uncertainties relating to VAT and PAYE in relation to NED remuneration in an interpretation note.
Author: Seelan Muthayan, VAT Director, BDO SA. Expanding the VAT Base In order to expand the current VAT base, it is proposed in 2018/19 that the supply of fuel will no longer be zero rated. This will no doubt have a direct impact on transport costs. Government will look at either freezing or reducing fuel levies in order to reduce the impact on transport cost. As part of the focus globally to deal with base erosion and profit shifting, more attention will be given to businesses providing foreign electronic services to South African Consumers. As previously mentioned in the 2015 budget the regulations dealing with which electronic services are subject to VAT will be updated with a view to removing any uncertainties and current practical difficulties being experienced.
Author: Heinrich Louw. On 21 October 2016 judgment was handed down by the High Court (Gauteng Division, Pretoria) in the matter of BMW South Africa (Pty) Ltd v The Commissioner of the South African Revenue Service (as yet unreported). Briefly, the applicant (Applicant) was a vendor for purposes of Value-added Tax (VAT). The respondent, being the South African Revenue Service (SARS), had made a finding that the Applicant did not pay certain amounts of VAT due in respect of the October 2011 to February 2012 VAT periods.
Author: Louis Botha. An efficient advertising campaign can often be the difference between a successful and an unsuccessful business venture. When advertising the price of a product, however, businesses must be mindful of the provisions of the Value-Added Tax Act 89 of 1991 (VAT Act). This issue recently came up in the matter of Security Outfitters Safety Gear/L Munian/2016-4420F, a ruling handed down by the Directorate of the Advertising Standards Authority of South Africa (ASA Directorate) on 18 November 2016 (Ruling).
When disputing a tax debt, especially one involving the complex issue of unlawful tax avoidance, taxpayers should always exercise great caution. This sentiment is echoed by the recent judgment in Dale v Aeronastic Properties Ltd (Commissioner for the South African Revenue Service and Others Intervening) (9297/2016)  ZAWCHC 160 (25 October 2016). Although the court in this case was concerned with whether an order to place the respondent taxpayer, Aeronastic Properties Ltd (Aeronastic), under business rescue, its precarious financial situation was caused largely by an expensive tax debt. In the course of its judgment, the court made reference to the taxpayer’s dispute with the South African Revenue Service (SARS), which dispute is the subject of this article.
Before buying anything, a purchaser should always be aware of all its obligations. This is one of the lessons to draw from the decision in Sheriff of the High Court, Piketberg and another v Lourens; In re: Standard Bank of South Africa Ltd v Trustees for the time being of the Eila Trust and others  4 All SA 239 (WCC). In this case the court had to decide, among other things, whether the sale of a property in execution could be set aside, where the purchaser had not met his obligations in terms of the Value-Added Tax Act, No 89 of 1991 (VAT Act), read with the conditions of sale.
For some time now there has been a shortage of accommodation for tertiary students in South Africa. Developers have seen the gap in the market and have started building apartment buildings to provide housing to students. The typical arrangement works as follows: The owner of the building rents individual apartments to the students for a period of 10 months a year. The apartments come with beds and tables. There is a communal kitchen, a laundry facility, and a lounge area with a TV and Wi-Fi. Sometimes the owners let the buildings to tertiary institutions who, in turn, let the apartments to the students.
In our current day and age where convenience is key, it is common for businesses to deliver purchased goods to their clients. For such businesses, especially those who specialise in providing delivery and logistical services, it is important to note the applicable VAT considerations when purchasing a vehicle. In RTCC v Commissioner for the South African Revenue Service (VAT 1345)  ZATC 5 (28 July 2016), the Tax Court had to determine whether input tax could be claimed by the taxpayer, a close corporation which carried on business in the courier industry, on the purchase of a vehicle that it used to make taxable supplies.
In the current tough economic times, it is common for companies to consider alternative funding arrangements to fund their activities, which minimise their cash flow obligations to third parties in the short term, while also ensuring that they comply with the relevant tax legislation and utilise it to their advantage. One option to consider in this regard, is the creation of a loan account by a debtor in favour of a creditor. In CLDC v The Commissioner for the South African Revenue Service (VAT1247)  ZATC 6 (5 September 2016), handed down by the Tax Court on 5 September 2016, the court had to deal with this issue and specifically the consequences of s22(3) of the Value-Added Tax Act. No 89 of 1991 (VAT Act).