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 South
Africa's National Treasury said on Wednesday that the VAT treatment of
commercial and residential accommodation will be reviewed. Landlords of
furnished properties have found themselves in the Value Added Tax (VAT)
net because of "definitional technicalities". VAT is levied
at 14%, and is largely an administrative headache for smaller business
operators
In a summary of additional tax proposals for 2010/11, National Treasury
said: "The supply of commercial accommodation is taxable at the rate
of 14%, while the supply of residential accommodation is exempt. The supply
of commercial accommodation (such as a motel or a hotel) usually consists
of lodging together with domestic goods and services."
It has "come to light that certain entities that supply exempt residential
accommodation have (as a result of definitional technicalities) crossed
over into supplying commercial accommodation".
National Treasury cites the example of student accommodation with furniture
and fittings, without any services. "This supply marginally pushes
this accommodation into the ambit of commercial accommodation, on which
VAT must be charged."
It said legislation may be introduced next year "to address these
shortcomings".
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Newsletter:
03 September 2010 to 10 September 2010 - Focus on Bloemfontein, Free State, South Africa
