TRAVEL agencies that are being
audited by Sars are disputing
the findings. Agencies as well
as SAA, as the airline most
affected, could be liable for
millions.
Earlier this year, Sars began
auditing travel agencies. In
Sars’ view, travel agencies
owe VAT on commissions and
overrides on international air
tickets issued over the past six
years.
A few agencies have received
the findings, which suggest
they owe millions in VAT.
These findings are currently
being disputed on the basis
that Sars never informed the
industry that commissions and
overrides on international air
tickets.
Asata ceo, Otto de Vries,
explains that in 2005 Asata
was issued with a ruling by
Sars on how to apply zerorating
on international air
transport. That ruling, together
with almost four other rulings
that Sars had issued over the
years, was withdrawn in 2011.
However, he says: “When
you withdraw a ruling, one
has to assume that unless a
new ruling is issued or a new
interpretation of the legislation
is issued, the industry will
continue to apply the law in the
way that it has always done it.”
According to Otto, the travel
industry and airlines have
continued to apply the same
application to zero-rating
as they have always done,
because Sars has never
replaced the ruling that they
removed.
Earlier this year, Trudie Botha,
tax expert of Zeelie Auditors,
said the relevant section
of the VAT Act was open to
interpretation and that until
Sars issued a practice note on
how the Act should be applied,
agents had the right to dispute
any audit findings on how zeroratings
should be applied to
international travel.
One of the affected parties
spoke to TNW on condition
of anonymity. The company
has been audited by Sars
and is disputing the findings.
According to the source, there
are five or six companies in
the same boat. Like Otto,
the source emphasises that
Sars withdrew its 2005 notice
without telling the industry.
The source says the
ramifications if companies are
to pay this VAT retrospectively
are “massive”. “You’re talking
millions and millions of rands.”
Furthermore, should the
audited companies be forced
to pay VAT on commissions
and overrides, they will claim
these monies back from the
airlines and SAA will be in for
the largest sum. This means,
in effect, there will be a zero
sum for Treasury, the source
says. “All they are gaining at
this stage is penalties and
interest.”
However, SAA HOD: Media
Relations, Tlali Tlali, told
TNW that SAA’s position on
the application of VAT on
international air tickets is that
VAT is charged at a zero rate
and should remain as such
in line with the VAT Act that
international travel is zero
rated. The airline is not in
discussion with Sars regarding
the investigation.
“We believe that in the
highly unlikely event that
Sars decides to impose VAT
at standard rate 14% on the
commission earned by the
agents on international tickets,
it will certainly affect the
entire travel/airline industry at
large and the passengers in
particular because ultimately
that VAT portion on the
commission will be collected
from the passengers.”
Asata will meet with Sars on
this matter.
