COVID-19 pandemic

The COVID-19 pandemic is here to stay and nobody in any country has not been affected in some way. BC Accounting Services is not here to offer advice on the virus itself but financial implications on companies and individuals. Virus information is to be obtained from the relevant departments of your local government. BCAS advises South Africans to visit www.sacoronavirus.co.za for all the information needed.

VAT implications?

So what about the VAT on items required by government to be bought for the safety of staff and visitors? The SA government has put in strict procedures to be adhered to by companies at their premises and anywhere where there is contact with customers or other people. These includes (not limited to):

Valid claims

These purchases are all valid business expenses as they are required in Covid-19order for you to trade. Because of this fact, the normal VAT rules apply. If you are selling these items, you have to charge VAT (as all invoices must have VAT anyway) but more applicable is the VAT that you are paying and therefore you can claim. Provided that you are both VAT vendors, you can claim the VAT on the given items in the given period.

Financial implication

COVID-19 has had a significant impact on all countries involved and SA is no different. This has obviously affected businesses and this has even closed down companies. For the companies that have able to trade through or after the lock down, there is an important change that needs to happen. In the annual financial statements from April 2020 have to have a section or note detailing the impact of COVID-19 on the business. This will either be a subsequent event (after year end but before finalisation) or the details of the impact in the current year.

These disclosures will have to be discussed with your accountant or audit firm who prepares the financial statements.

For a more in depth look at VAT, please read the full article, or contact us for more information.

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