The South African Revenue Service (SARS) issued a ruling on April 28, 2026, clarifying the VAT treatment of forfeited deposits by game reserves. This ruling impacts the tourism sector significantly.
The ruling, effective from December 1, 2023, states that deposits are considered as consideration for accommodation under the VAT Act. Therefore, output tax must be accounted for when the deposit is set off against the total booking amount.
A forfeited deposit does not trigger a VAT adjustment since the underlying supply has not been cancelled. SARS had previously indicated that accommodation establishments must account for VAT on forfeited deposits.
Key facts:
- SARS issued VAT Ruling: VR 020 on April 28, 2026.
- The ruling applies to specific transactions as described in the ruling.
- Filing deadlines for non-provisional individual taxpayers is October 23, 2026.
- Provisional individual taxpayers and trusts must file by January 22, 2027.
- Companies must submit income tax returns within 12 months from the end of their financial year during 2026.
SARS Commissioner Edward Kieswetter published these deadlines in Government Gazette No. 54598 on April 30, 2026. The clarity provided by this ruling aims to enhance tax compliance within the hospitality context.
Johnstone Makhubu emphasized that “the best service is no service and tax should just happen.” He noted that SARS carries significant responsibilities in ensuring trust in its operations.
As deposits and cancellation policies arise across various industries, this ruling may prompt additional scrutiny and adjustments within those sectors. Observers expect a continued focus on compliance as businesses adapt to these changes.
