- The 2025 VAT law amendments, effective from 1 April 2026, redefine “insurance” and introduce a new definition of “premium” for VAT purposes in the short-term insurance industry.
- The changes aim to address issues highlighted by the Constitutional Court’s Capitec Bank Limited v CSARS judgment, particularly regarding VAT treatment of “free” or subsidised insurance.
- VAT analysis must now consider whether there is “direct consideration” (a premium) for insurance, even if paid by third parties or subsidised.
- Arrangements likely impacted include complimentary cover, premium holidays, discounts, embedded cover, third-party paid premiums, and outsourced distribution models.
- Industry participants should review their products and arrangements for VAT compliance under the new definitions.
Source: ensafrica.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.
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