The SABC, TV licenses and VAT
26 February 2015
Posted by: Author: Lesedi Seforo
Author: Lesedi Seforo (SAIT)
your TV license, it’s the right thing to do.”
Most South Africans are
very familiar with this tagline, which stems from an initiative launched by the
South African Broadcasting Corporation (SABC) many years ago in a desperate bid
to encourage TV owners to pay their licenses. Besides the numerous other
challenges that have plagued the organisation of late, the non-payment of TV
licenses by South Africans remains the most persistent.
This has created obvious
cash flow problems for the public entity and by extension, VAT problems.
A VAT vendor can either
account for VAT on an invoice basis or payments basis. In terms of the latter,
a VAT vendor pays VAT to SARS during a tax period in which it receives payment
for the goods or services supplied to its customers. In terms of the former,
VAT is payable during the tax period in which customers were invoiced for the
goods or services supplied to them. The invoice basis is clearly the worse of
the two options since a vendor could conceivably end up having to pay VAT over
to SARS in respect of sales for which it has not yet been paid by its
vendors operate on the invoice basis because SARS has limited the payments
basis to a very small class of taxpayers.
For vendors operating on
the invoice basis, a supply of goods or services is deemed to be made on the
earlier of an invoice being issued by that vendor, or payment being received
for goods or services supplied by the vendor.
What does this have to do
with the SABC?
Let’s assume the SABC
invoices millions of TV owners in December for the payment of TV licenses. A
lot of the ‘customers’ invoiced will only pay months later, if at all. In the
meantime, the SABC will have to pay millions of Rands in VAT to SARS during the
December/January months when it has not even received the cash resources to
enable it to make those payments.
To address this very
serious issue, one of the tax proposals made by government for the 2015/2016
legislative cycle is that the SABC and its subsidiaries be allowed to account
for VAT on the payments basis.
This would definitely
bring some much-needed relief to the public entity.