Page 409 - Juta's Indirect Tax

IN 42 VaLue-added tax act: InterPretatIOn nOtes IN 42
Where commercial accommodation is provided for periods not exceeding 28 days, the full charge or tariff is subject to VAT. In the following circumstances, the vendor supplying commercial accommodation will only account for output tax on 60% of the all-inclusive charge for the supply of commercial accommodation that is—
• supplied for an unbroken period exceeding 28 days, and
• charged as an all inclusive fee for commercial accommodation and the supply of domestic goods or services.
It is important to note that the full value of any domestic goods or services, which are supplied or charged for separately, is subject to VAT.
‘Domestic goods and services’ means goods and services provided by any enterprise supplying commercial accommodation, including:
• cleaning and maintenance;
• electricity, gas, air conditioning or heating;
• a telephone, television set, radio or other similar article;
• furniture and other ttings;
• meals;
• laundry; or
• nursing services
4.3.3 Meals and beverages
The supply of the basic foodstuffs listed in Schedule 2, Part B to the VAT Act is zero-rated. However, the supply of prepared meals, snacks, beverages or other refreshments (excluding meals falling within the ambit of ‘domestic goods and services’ as de ned in paragraph 4.3.2) supplied, attracts VAT at the standard rate of 14 percent.
Example: X, a resident of Botswana, whilst on business in South Africa has a meal at the Rainbow Nation Restaurant. The Rainbow Nation Restaurant is a registered vendor for VAT purposes.
The supply of the meal by the Rainbow Nation Restaurant to X will be standard-rated for VAT purposes (i.e. 14%) as the meal is consumed by X whilst she is the Republic.
Example: X, a resident of Botswana, arranges with a South African travel agent to arrange the supplyof her meals at various restaurants for her upcoming visit to South Africa. The South African travel agent arranges the supply of such meals with the Rainbow Nation Restaurant. The Rainbow Nation Restaurant is a registered vendor for VAT purposes. The supply of the meals by the Rainbow Nation Restaurant to X will be standard-rated for VAT purposes (i.e. 14%), as the meal is consumed by X whilst in the Republic.
4.3.4 Other Entertainment
The supply of any entertainment by a local entrepreneur attracts VAT at the standard rate of 14 percent.
Example: X, a resident of Botswana, whilst on business in South Africa, attends a show hosted by Rainbow Nation Restaurant. The Rainbow Nation Restaurant is a registered vendor for VAT purposes and charges an entrance fee for such show.
The supply of the show by the Rainbow Nation Restaurant to X will be standard-rated for VAT purposes (i.e. 14%).
Example: X, a resident of Botswana, arranges with a Botswana travel agent to acquire a ticket on her behalf, to attend ashow to be hosted by Rainbow Nation Restaurant. The Rainbow Nation Restaurant is a registered vendor for VAT purposes and charges an entrance fee for such show.
The supply of the show by the Rainbow Nation Restaurant to X will be standard-rated for VAT purposes (i.e. 14%).
4.3.5 Time of supply
The general rule relating to the time of supply is that the supply is deemed to have taken place where an invoice is issued or any payment in respect of the supply is received, whichever is earlier. The signi cance of the time of supply is that it determines in which tax period the VAT leviable on a transaction must be accounted for and paid for the bene t of the National Revenue Fund.
Therefore output tax must be accounted for by the local entrepreneur for the supply of the tour package at the earlier of an invoice being issued or any payment received for the supply and not when the service is rendered (e.g. when the hotel room is used by the tourist).
5. Game Viewing
With the introduction of VAT, passenger transport by way of road and rail was exempt from VAT in terms of section 12 (g) of the VAT Act. This was speci cally aimed at providing tax relief to the less af uent consumers who use public commuter services (e.g. buses, taxis and trains). The relief afforded in terms of this provision was not intended to exempt luxury transport services. However, it was dif cult to de ne what constitutes commuter and luxury transport, the latter including game viewing.
In this regard, the wording of the VAT legislation did not provide absolute clarity as to whether the supply of game viewing drives was passenger transport as envisaged in the exemption or not. The policy adopted by SARS is that the service provided is game viewing and not passenger transport, and therefore subject to VAT at the standard rate. With this in mind, an amendment to the de nition of ‘motor car’ in section 1 of the VAT Act came into effect from 24 January 2005 to unblock input tax on a legitimate business expense, namely the purchase of game viewing vehicles. In addition, an amendment to section 12 (g) of the VAT Act was effected in order to provide clarity that the supply of game viewing drives is a taxable supply at the standard rate.
Subsequent to the promulgation of the relevant law amendments in 2005, representations were made to SARS to consider delaying the implementation of the aforementioned sections, due to the negative impact the amendments would have on the industry. After speci c consultation and agreement, the following was approved by SARS:
Juta’s IndIrect tax 2016 401