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Claiming Vat for business travel: What you need to know...

by , 19 October 2016
Thanks to more and more global ventures, travel has become an integral part of doing business in South Africa. And that means in many cases business travel expenses are adding to your Vat headache! Here's what you need to know about the five most common business travel expenses and their Vat consequences.

Iit's estimated that in the US, business travel spending — including air tickets, hotels and car rentals — exceeded $100 billion last year, Leslie Kwoh explained in an article in The Wall Street Journal earlier this week. Here in SA, those figures will be pretty similar (except for the dollar sign).
And while business travel is getting more frugal – the almost lavish perks that used to attend business travel are being seriously scaled back under the watchful eye of the corporate bean counters – there's still a lot of money being spent.
And businesses need to ensure they claim Vat on it where they can.
Five common business travel expenses and their Vat consequences
There are five common travel expenses you'll have to deal with when it comes to their Vat implications, states Vat specialist, Dee Bezuidenhout in The Practical Vat Loose Leaf Service.
  1. Air travel: Domestic air tickets include Vat at 14% (the standard rate) and that means you can claim this as input tax. Foreign air tickets, on the other hand, are zero-rated for Vat so there's no input tax benefit to be had.
  1. Rental of commercial vehicles and buses: You can claim input tax, provided the bus can carry more than 16 passengers.

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  1. Car rental: Vat is charged at 14% on car rental in South Africa. However, the bad news is that this can't be claimed as an input tax deduction. But don't worry. Even though SARS won't allow an input tax claim on the rental of a car, the Vat on the insurance, damage, excess and accident administration charge can be claimed.
  1. Accommodation: If the establishment is a Vat vendor, as most hotels and commercial accommodation facilities will be, Vat is charged at 14%. That means you can claim back the 14% input tax charged on business travel accommodation. In the case of guesthouses and bed and breakfasts, check to see if they're Vat vendors before you book.
  1. Meals and refreshments (including alcohol): You can claim the input tax charged on meals as long as this isn't a client dinner. Where clients are taken to dinner, no input tax can be claimed on the client's meal and refreshments, as this is entertainment.
So there you have it. By understanding the Vat implications of your company's business travel arrangements, you can ensure that you're claiming Vat where necessary and can advise your company with alternative options (where applicable) to get even more input tax back.

To get more information on business travels Vat claims, get your hands on The Practical Vat Loose Leaf. In the Practical Vat Loose Leaf we've got a dedicated chapter on business travel and in it you'll discover:
  • 19 Input tax savings you could be missing out on
  • Checklist: 4 common business travel expenses and their Vat consequences
  • Step by step: 3 logical steps to follow when processing business travel expenses
Get your Practical Vat Loose Leaf here...

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