Satsa is working behind the scenes and had approached the Department of Tourism to bring about clarity on the VAT requirements for the tourism industry, said David Frost, Satsa CEO.

He said Satsa had been aware of concerns about the application of either zero-rated or standard-rate VAT as it applied to the travel and tourism industry before a recent court case between SARS and a local tour operator came to light. Frost told Tourism Update that Satsa hoped to reach an equitable and historically non-punitive solution. “There needs to be clarity on the agreed way forward,” said Frost.

A recent poll published by Tourism Update, asked readers if they understood the SARS VAT interpretation note no. 42 as it applied to the supply of goods and services by the travel and tourism industry. To date, 75% of readers had voted ‘No, there is still some confusion about the roles of agent and principal, and standard and zero-rated VAT’, while 25% voted ‘Yes, the information is clear, in black and white’.

Gerhard Badenhorst, Tax Executive at ENS Africa, said SARS needed to update its VAT interpretation note no. 42, to make it clearer when to charge either standard or zero-rated VAT. He added that some local tour operators might think the way they were accounting for VAT was correct while their actual documentation did not support the VAT treatment.

He suggested that local tour operators who were unsure of the VAT treatment and whether or not they were compliant with the legislation, should approach SARS to obtain a private binding ruling to confirm that their application of the legislation was actually correct.