- South Africa’s Constitutional Court ruled in a dispute between Capitec Bank Limited and the SARS Commissioner regarding VAT input tax credits
- The dispute involved loan cover bundled with the bank’s lending services
- Capitec does not charge VAT on interest but charges VAT on fees and claims input tax deductions for fees
- The dispute with SARS involved Capitec deducting an amount for loan cover in its VAT return
- SARS contended that the loan cover was part of the exempt activity of earning interest
- The Constitutional Court sided with Capitec, stating that the loan cover was a mixed supply in the course of lending money for interest and fees
- Capitec argued for input tax credits on the full value of the loan cover payment, while SARS argued against it.
Source: answerconnect.cch.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
