A research report submitted to the Faculty of Commerce, Law and Management, University of Witwatersrand, Johannesburg, in partial fulfilment of the requirements for the degree of Master of Commerce (Specialising in Taxation) / The taxation of financial services is challenging from a Value-Added Tax (VAT) perspective. Conceptually, VAT should apply to any fee for services but where financial services are concerned, there is difficulty in quantifying the value-added by these institutions. According to the First Interim Report on Value-Added Tax for the Minister of Finance (the Davis Tax Committee report) most jurisdictions have therefore opted to exempt financial services from VAT.
In South Africa, financial services are exempt from VAT, however, where an explicit fee is charged as consideration for a supply, it will be taxed. The South African VAT legislation provides for the denial of input tax on costs incurred to generate exempt supplies. The burden of an irrecoverable VAT cost exposes the financial industry to hindrances such as vertical integration and tax cascading.
Certain VAT jurisdictions have however implemented policies to reduce the overall cost of financial institutions. This study will therefore analyse the alternate VAT methods to determine whether a more viable mechanism of taxing financial services in South Africa, exists.
Key words:
Apportionment, cascading, implicit fees, input tax, efficiency, exemption, explicit fees, equity, full taxation approach, neutrality, simplicity, standard rate, reduced input tax credit, value-added, VAT grouping, vertical integration, zero-rating / MT2017
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:wits/oai:wiredspace.wits.ac.za:10539/22216 |
| Date | January 2016 |
| Creators | Moodley, Perushka |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis |
| Format | Online resource (89 leaves), application/pdf |
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