Commercial accommodation is defined as “any accommodation in a hotel, inn, guesthouse, or other similar establishment used for the provision of accommodation for reward”. If a taxpayer makes a supply of commercial accommodation, such a supply is treated as being an “inward supply” for VAT purposes.
Commercial accommodation includes:
- Accommodation is provided at or above the level of basic food and drink supplied by the establishment; and
- services that are incidental to the provision of commercial accommodation (for example, room service).
Property tax in South Africa
You may have to account for output tax if you make an inward supply of commercial accommodation. If a taxpayer provides commercial accommodation to persons who are carrying on an enterprise, it will be required to account for output tax on the supply if they are registered vendors.
A taxpayer that makes an inward supply of commercial accommodation (ie supplies it in the course or furtherance of an enterprise to any person that is not carrying on an enterprise) must account for output tax.
How is your property taxed in South Africa?
Output tax is thus levied on the supply of commercial accommodation. This means that if a person who supplies commercial accommodation charges R1 000 (including VAT) per night, he must charge VAT at 14% and collect R140 VAT in respect of each night’s stay. He must then pay this VAT over to SARS when he submits his monthly/quarterly VAT return. Hence he ends up paying out R1 140 per night.
The only way around this would be for you to prove to SARS that your stay was for business purposes rather than purely personal purposes (in which case no output tax will be charged).
Conclusion
The takeaway is that VAT on commercial accommodation is not included in the room price and it does not form part of the cost of your stay. You should be aware that if you pay for your accommodation using an invoice, then VAT will be added to this invoice and you will have to pay it when you check out.
