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News & Press: SARS operational & eFiling questions

Is the supply of labour subject to VAT?

02 March 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: Company A and company B are in the same group of companies. All the employees are employed in Company A. Company A recovers the costs of the employees who work for company B, from company B. Must Company A charge output VAT on the invoice?

A: The charge from Company A to Company B in respect of the services rendered by its employees to Company B does not in our view constitute the payment of remuneration by an employer to an employee per proviso (iii)(a) to the definition of "enterprise” in section 1 of the VAT Act. Therefore such service would in our view constitute a standard rated supply for the purposes of section 7(1) VAT Act.

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.


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