In the Minister’s Budget speech on 21 February 2018, an increase in the standard rate of Value-Added Tax (‘VAT’) from 14% to 15% was announced, effective 1 April 2018 (‘the change date’).
The following questions and answers have been compiled to provide guidance in respect of the impact of the change in VAT rate on short-term insurance transactions. It has been prepared in accordance with the VAT Act, Short-term insurance specific SARS Binding General Rulings (BGR14, BGR32 and BGR37), Regulatory requirements and the common approach to the change to be applied across the industry.
Please refer to the SAIA / FIA websites at www.saia.co.za and www.fia.org.za or contact your Insurance Broker / Insurer for future updates of this and further information.
16-May: When this document was prepared and released on 26 March 2018, the insurance industry had applied for a special transitional ruling under Sect. 72 of the VAT Act to alleviate certain difficulties, anomalies and incongruities in respect of transitional arrangements. This ruling has been denied and all reference to this has been deleted from this updated version. It does not change the principles that were set out in the earlier version that remain intact apart from FAQ26 in respect of broker / intermediary fees invoiced after 31 March 2018 for services performed before 1 April 2018 that in terms of the general transitional rules attract VAT at 14%.