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VAT Quick Reference Guide for Non-Executive Directors (Issue 3)

This quick reference guide provides information and guidelines regarding the VAT treatment
of non-executive directors (NEDs) and should be read in conjunction with Binding General
Ruling (BGR) 40 “Remuneration Paid to Non-Executive Directors” and BGR 41 “VAT
Treatment of Non-Executive Directors”. This guide does not deal with all the legal detail
associated with VAT and is not intended for legal reference. For more details on VAT in
general, see the VAT 404 – Guide for Vendors.

All references to sections are to sections of the Value-Added Tax Act 89 of 1991 (VAT Act),
unless the context indicates otherwise. The Tax Administration Act 28 of 2011 and the Income
Tax Act 58 of 1962 are referred to as the “TA Act” and the “Income Tax Act” respectively. The
terms “Republic”, “South Africa” or the abbreviation “RSA”, are used interchangeably in this
document as a reference to the sovereign territory of the Republic of South Africa, as set out
in the definition of “Republic” in section 1(1). The information in this guide is based on the
VAT Act and the TA Act legislation as at the time of publishing.

The information in this guide is issued for guidance only. This guide is not an “official
publication” as defined in section 1 of the TA Act and accordingly does not create a practice
generally prevailing under section 5 of that Act. It is also not a binding general ruling under
section 41B of the VAT Act.

See the Frequently Asked Questions on BGRs 40 and 41: Non-Executive Directors (VAT and
PAYE) for a list of questions and answers clarifying certain technical and practical aspects
relating to BGRs 40 and 41.

 

Source: SARS

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