Deanw
30th Mar 2005, 10:35
While SAA takes a beating from the authorities, BA seems to have scored a win. :E
From Business Day today:
Ruling on BA deals SARS heavy VAT blow
BRITISH Airways (BA) prevailed again over the South African Revenue Service (SARS) yesterday when the Supreme Court of Appeals ruled that SARS may not claim value added tax (VAT) on international airline ticket sales.
SARS was tight-lipped on the ruling yesterday, saying it could not say yet what effect Appeal Court Judge Robert Nugent’s decision would have on the tax it collected from foreign airlines operating in SA, or how hard its coffers would be hit by the ruling.
A spokesman said the receiver “still needed to study the judgment”, and would respond later.
While the ruling will come as welcome respite for airlines battling to absorb fuel price hikes from rocketing oil prices, it will also come as a blow to SARS, which has met few obstacles as it moved to close loopholes to maximise revenue collections.
Yesterday’s ruling suggests SARS will now have to rethink how it levies taxes on international travel, which could put a dent in its coffers.
The BA case occurred after SARS raised an assessment of millions relating to the 14% VAT on the “passenger services” component of international ticket sales.
The dispute, which it first lost in the tax court, revolved around “passenger service charges”, which are one element of the total costs of an airline ticket.
Airlines pay “passenger service charges” to the Airports Company SA for services such as baggage handling, waiting-lounge facilities, and check-in counters. While airlines do not have to pay VAT for their general carrier service, the receiver claimed they should pay 14% VAT on these charges.
Although SARS would not state the value of the tax assessment against the airline yesterday, it is likely to run into many millions of rand as it covered a five-year period.
From Business Day today:
Ruling on BA deals SARS heavy VAT blow
BRITISH Airways (BA) prevailed again over the South African Revenue Service (SARS) yesterday when the Supreme Court of Appeals ruled that SARS may not claim value added tax (VAT) on international airline ticket sales.
SARS was tight-lipped on the ruling yesterday, saying it could not say yet what effect Appeal Court Judge Robert Nugent’s decision would have on the tax it collected from foreign airlines operating in SA, or how hard its coffers would be hit by the ruling.
A spokesman said the receiver “still needed to study the judgment”, and would respond later.
While the ruling will come as welcome respite for airlines battling to absorb fuel price hikes from rocketing oil prices, it will also come as a blow to SARS, which has met few obstacles as it moved to close loopholes to maximise revenue collections.
Yesterday’s ruling suggests SARS will now have to rethink how it levies taxes on international travel, which could put a dent in its coffers.
The BA case occurred after SARS raised an assessment of millions relating to the 14% VAT on the “passenger services” component of international ticket sales.
The dispute, which it first lost in the tax court, revolved around “passenger service charges”, which are one element of the total costs of an airline ticket.
Airlines pay “passenger service charges” to the Airports Company SA for services such as baggage handling, waiting-lounge facilities, and check-in counters. While airlines do not have to pay VAT for their general carrier service, the receiver claimed they should pay 14% VAT on these charges.
Although SARS would not state the value of the tax assessment against the airline yesterday, it is likely to run into many millions of rand as it covered a five-year period.