Travel agencies in South Africa that were audited by Sars in the VAT on Supplementary Commission issue, are battling to get their tax clearance certificates issued.
This all relates to the long legal battle that Sars lost, the results of which have not yet percolated through Sars’ systems.
It’s now causing embarrassment to agencies and hindering business when clients look them up to find they are labelled “non-compliant” in Sars’ system.
(The case concerned the application of zero-rating on international supplementary commissions, and was brought by Rennies Travel, with the backing of Asata. The Supreme Court of Appeal upheld with costs the appeal by Rennies Travel against the order the tax court had handed down in December 2020. The judgment also set aside “the additional VAT assessments in respect of the appellant’s February 2021 to December 2016 VAT periods, to the extent that they impose VAT at the standard rate on supplementary commission.” Although Sars attempted to appeal the ruling in the Constitutional Court, it failed and its application was dismissed with costs.)
“Upon checking our tax compliance status early in January, we discovered that we are ‘non-compliant’ on VAT. Further investigation revealed that Sars has lumped our ‘outstanding VAT’ in with our normal VAT status, which is as clean as a whistle”, said one agency manager.
“We have challenged the status and are still waiting for Sars to review and update our tax clearance certificate. If a client were to look up our compliance status it would show us as non-compliant, a faux-pas no business can afford these days. Our tax attorney has copies of the Supreme Court ruling overturning the override VAT issue and the ruling in favour of the travel agency. He has been dealing with the Sars attorneys and, alarmingly, they are not even aware of the judgment! We have filed for a refund on monies paid to Sars but who knows if that has been actioned? My attorney has approached the Tax Ombudsman to have our tax re-assessed, our status corrected and our refund paid.”
Lidia de Olim Folli CEO of Bidvest Travel Holdings (also audited by Sars), told Travel News that the group found themselves in a similar situation. “We did have Sars do a similar thing in early January, which was flagged by our Rennies admin team. We had to re-engage with Sars to have the revised assessments removed from our account as per the Supreme Court and Constitutional Court rulings. Sars eventually actioned the request during the week of January 16 and our status as compliant has now been re-confirmed.
“Although not unexpected, there have been no articles issued by Sars in respect of the precedent now set by both these judgments and how they impact the travel industry,” she added.
Otto de Vries CEO of Asata, believes the issue is admin-related and that Sars is not filtering relevant information through its systems. “It is now incumbent upon agents to prove their compliance with a copy of the actual Constitutional Court judgment to get their tax status corrected – another part of our failed state. Asata will be writing to Sars to rectify the matter and will also make the judgment available to agents on the Asata website.”
Says de Vries: “Sars also needs to advise us of the new ruling, that override payments do not attract VAT, gazetted, so that it is clear and agents can operate appropriately in future.”
