Do you know the Vat implications when it comes to these four business travel expenses?

Simangele Mzizi, Fsp Business, 03 Sep. 2014

Tags: vat, travel expenses, travel expenses and vat, input tax

Business travel expenses don’t have to add to your Vat headaches.

We’re here to help you with them so you can avoid penalties. Today we’ll make it clear when you can and can’t claim input tax.

Keep reading to discover four of the most common business travel expenses and their Vat implications so you’ll avoid penalties.

Four common business travel expenses and their Vat consequences

Business travel expense #1: Air travel
Domestic air tickets include Vat at 14% (the standard rate).
Vat implications: The good news for your bottom line is that you can claim this as an input. Foreign air tickets, on the other hand, are zero-rated for Vat and consequently there’s no input tax implication or benefit to be had.
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Business travel expense #2: Car rental
Vat is charged at 14% on car rental in South Africa.
Vat implications: There’s some bad news here, you can’t claim an input deduction.
The reason for this is the same reason for disallowing the input deduction when you buy a motor car – it’s a passenger vehicle.

Business travel expense #3: Meals and refreshments (including liquor)
Vat implications: You can claim the input tax charged on meals.
Bear in mind that if you take a client out to dinner, you can’t claim input tax on his meal and refreshments because this is entertainment.

Business travel expense #4: Accommodation
Vat is charged at 14% on accommodation if the establishment is a Vat vendor (most hotels, commercial accommodation facilities, guesthouses and bed and breakfasts are Vat vendors.)
Vat implications: You can claim back the 14% input tax charged on business travel accommodation.

Now that you know the Vat implications of these business travel expenses, handle them correctly so you can avoid penalties.

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