Supreme Court Allows Input VAT Deductions for Underwriting Services, Overturns Penalty Decision

• The South African Revenue Service posted a Supreme Court of Appeal decision on input VAT deductibility for underwriting services.
• A holdings company sought to deduct input VAT on fees for underwriting services related to a rights offer.
• The Tax Agency initially disallowed the deduction and imposed a 10 percent penalty.
• The Tax Court allowed the deductions and removed the penalties.
• The Supreme Court of Appeal ruled that the rights offer and underwriting services were part of the taxpayer’s enterprise.
• The VAT Act permits input VAT deductions for services used in an enterprise.
• The penalty was deemed unjustified as the taxpayer relied on a professional tax opinion.

Source: news.bloombergtax.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.