The VAT Treatment of Vouchers: a Comparative Study between South Africa and the European Union

Abstract

For VAT purposes, two issues arise when vouchers are used namely whether the time of supply is when the voucher was issued and imported (in the case of vouchers issued outside the Republic) into South Africa, or, when a voucher is exchanged for goods or services; and, secondly, whether VAT must be accounted for on the discounted amount paid for the voucher or the stated monetary value of the voucher. This article critically examines the VAT treatment of vouchers under the VAT Act (as it currently stands) with reference to the draft Interpretation Note on the VAT treatment of vouchers at a discount. It further analyses the Draft harmonised EU proposals on the VAT treatment of vouchers in the EU with a view to seeking a solution to the current South African uncertainties in respect of the time and value-of-supply rules when vouchers are issued.