SATSA, the Southern African Tourism Services Association, has expressed concern that tourism businesses arranging inbound travel for international clients to South Africa are now being required to pay VAT on their fee. SARS claims these businesses are acting in the principal role. However, they are agents and as such should not be required to charge VAT.
“To burden tourism SMMEs with confusing and complex VAT policies that lead to accidental non-compliance hampers their ability to contribute to economic growth.”
“SARS has publicly stated that it intends to minimise the burden of compliance for SMMEs and to clarify any uncertainties so that SMMEs understand their tax obligations better. This new requirement for agents to pay VAT on fees levied to international travellers flies in the face of this,” says David Frost, CEO SATSA.
African Moments Travel is an agent in this position. Dennis Spaeth, the Director, says, “We have spent over two years going through various procedural steps to highlight that, as an agent, we have acted correctly by not charging VAT on the fee we charge international clients for booking their travel in South Africa. Our attempts to clarify our position and our role as an agent to SARS have been ignored or not answered directly.”
SARS should simplify the way VAT is levied within tourism and clarify how VAT should be correctly levied.
SATSA believes that this is an example of unnecessary red tape which contradicts Government’s goals of growing the tourism sector to its full potential. Frost says, “Tourism is a key driver of SMMEs and employment, particularly in peri-urban and rural areas where other industries do not operate. To burden tourism SMMEs with confusing and complex VAT policies that lead to accidental non-compliance hampers their ability to contribute to economic growth.”
Instead he argues that SARS should simplify the way VAT is levied within tourism and clarify how VAT should be correctly levied for the various services and roles (agent/principal) found within the industry. This could be done by working with the industry associations that represent tourism and travel businesses, he says.
