South Africa Tax Agency Posts Constitutional Court Decision Clarifying Loan Tax Treatment Under VAT Act

The South African Revenue Service April 12 posted online the Constitutional Court Judgment for Case No. CCT 209/22, clarifying the tax treatment of loans in relation to deductions under the VAT Act. The taxpayer, a company that provided loans and charged VAT on fees while claiming input deduction on those fees, took out insurance to protect itself from borrowers not repaying their loans. In calculating its VAT payable, the company made a deduction related to the amount it paid to customers as loan cover. The Tax Agency disallowed the deduction and issued an additional assessment. The Tax Court upheld the ...