Schools warn VAT change could cripple sector

Several educational institutions have voiced their objection to proposed changes to the value-added tax (VAT) Act, that will effectively force all VAT-registered schools to deregister.

- Amanda Visser

In a comprehensive submission, the Independent Schools Association of Southern Africa (Isasa) warns that the changes will affect stability of the education sector.

Educational services have been exempt from VAT, but only when services were supplied in return for school fees, tuition fees, or payments for lodging.

Schools with commercial activities such as the supply of uniforms or availing sports facilities, halls, swimming pools, or hostels to private clubs or individuals - could register for VAT and claim a percentage of input tax deductions.

National Treasury wants to amend the VAT Act in the draft Taxation Laws Amendment Bill (TLAB), by proposing the removal of “school” and “school fees” from the wording of the relevant sections in the VAT Act.

This would mean all supplies of goods or services by schools, regardless of whether it is in return for school fees or not, will be exempt under the VAT Act.