Gerhard Badenhorst, a tax director at the corporate law firm Sonnenberg Hoffmann Galombik, says that, "In terms of a ruling issued by Sars, stamp duty is calculated on the VAT inclusive rentals, unless the VAT is reflected separately on the lease agreement. Sars is of the view that the ruling reflects the correct interpretation of the Stamp Duty Act as it currently reads."
The lessor can, therefore, save significant stamp duty by merely showing the VAT separately from the rental payments on the lease agreement, rather than reflecting the VAT inclusive rentals.
He says that it is the lease agreement that triggers the stamp duty liability, and the rental payable in terms of the lease is merely the means by which the stamp duty is calculated or quantified. It should therefore make no difference as to whether the rental is reflected VAT inclusive or exclusive on the lease agreement. Since VAT is collected for Sars and does not accrue to the lessor there is no justification in calculating stamp duty on the VAT inclusive rental, and the Stamp Duty Act should be amended.
Article in Sunday Argus
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