Four different transport types and how Vat is charged
Whether you run a transport company or have to transport employees, you need to know the Vat rules that apply to passenger transport in South Africa.
Today, we're sharing those with you.
Vat and transport costs: What you need to know
As a main rule, the transport of fare-paying passengers in South Africa is exempt from Vat. This includes road and rail. While it doesn't specifically refer to air transport within South Africa, it follows that domestic air transport will be subject to 14% Vat and international air travel is zero rated (Section 12(g) of the Vat Act).
Take a look at the table below to determine how Vat is charged on road, rail, sea and air transport
Transport Type - Within South Africa - Cross Boarder/International
Road - Exempt from Vat - Vat at the zero rate
Rail - Exempt from Vat - Vat at the zero rate
Air - Subject to 14% Vat - Vat at the zero rate
Sea - Subject to 14% Vat (e.g. Cape Town to Durban) - Vat at the zero rate
Keep in mind these Vat exempt transport types
Road and rail transport to fare-paying passengers, within South Africa, is exempt from Vat. This means owners of vehicles used for road and rail transport within South Africa will never register for Vat. They fall out of the scope of Vat entirely, irrelevant of whether their turnovers exceeds R1 million or not.
Note: If road or rail transporters provide passenger transport both within South Africa and cross-border, then they'll register for Vat, but only for the part subject to the zero rate.
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Examples of Vat exempt transport:
• Shuttle services;
• Bus fares;
• Gautrain fares;
• Metro rail fares;
• Shosholoza Meyl fares;
• Ambulance charges (but not air ambulances); and
• The Blue Train.
Note: Any additional charge, such as parking at the station, is subject to Vat at the 14% standard rate.
Bob's Shuttle Service operates shuttles between Pretoria and OR Tambo Airport. The group recently purchased three cars to use as shuttles. Road transport of fare-paying passengers within South Africa is exempt so Bob's Shuttle Service won't register for Vat. It can't claim any input tax relating to their purchases and/or expenses. It also can't declare output tax on passenger fares.
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