A special allowance in the Value-Added Tax Act grants a benefit to those individuals who stay frequently in hotels, retirement homes or similar establishments for extended periods of time.
A person who stays for 29 days of more in any hotel, guesthouse, inn, boarding house, retirement home, or similar establishment, only 60% of an all inclusive charge for accommodation and domestic goods or services will be subject to VAT.
This VAT benefit only applies to unbroken bookings of 29 days or more.
When commercial accommodation is provided to a person for a period of 28 days or less, the full amount charged for the accommodation and any domestic goods and services (or any other supplies) are subject to the VAT at the standard rate.
Which charges does this calculation apply to?
"The calculation is applied to the all-inclusive tariff"
This means that the special VAT calculation is applied to:
- the accommodation charge, and
- any domestic goods and services.
What are domestic goods and services
The Act seems 'any domestic goods and services' as:
- cleaning and maintenance
- electricity, gas
- air conditioning or heating
- a telephone
- television set
- radio or other similar article
- furniture and other fittings
- meals
- laundry
- nursing services
- water
when supplied together with commercial accommodation.
Information from SARS
The South African Revenue Service (SARS) has a detailed and informative document, 'VAT 411 - Guide for Entertainment, Accommodation and Catering'.
- It outlines all the specifics and provides examples along with mock calculations as guidance.
Feel free to access it via the the SARS website or simply download from the link below.
