Based on the recent announcement of the increase in Value Added Tax (VAT) from 14% to 15%, South African National Parks (SANParks) will adjust tariffs accordingly from 1 April 2018. SANParks is a registered VAT vendor and is registered on the invoice basis.
Regarding the treatment of existing reservations with stays or activities from 1 April 2018 onwards, SANParks consulted South African Revenue Services (SARS) for guidance. “As we are a public institution with many loyal local and international guests, it was important to ensure that we make the correct decision,” says Dumisani Dlamini, SANParks Chief Financial Officer. “SANParks has a unique business model in the way that reservation of accommodation is secured in national parks,” he continues. This business model was discussed in detail with SARS officials earlier this week.
According to Dlamini, SANParks therefore will be requesting guests with reservations, with stays (or activities) from 1 April 2018 onwards, to pay the difference as a result of the increased VAT rate. “In order for SANParks to execute its conservation mandate effectively, we have no choice, but to pass this increased statutory rate on to our guests,” he indicates.
SanParks goes on to say that the business model can be summarised as follows: After making reservations for national parks, guests are provided a provisional reservation through the “Deposit Request Letter”. Once deposits are received, whether immediately or by stipulated due date, such funds are transferred to a liability account in SANParks’ accounting records and are not processed as revenue. This is primarily so due to the fact that significant numbers and value of reservations are cancelled or amended before arrival date and refunds are processed in accordance with the terms and conditions relating to cancellations and amendments. Even if the full value of booked inventory is paid as the deposit, which in most cases is required, the amount is still regarded as a deposit and processed accordingly.
Once guests arrive in the national parks, and from an accounting perspective, revenue is applied from this deposit on a daily basis (in case of overnight reservations as well as other inventory (e.g. activities, conferencing, etc.)) and processed as revenue. It is at this stage, in other words during stay, that VAT then becomes liable. Further it is only at the end of the reserved itinerary that a tax invoice is generated and provided.
The current rates from 1 April 2018 onwards (for accommodation, activities, conferencing, conservation fees and WILD Card membership) have already been updated on the reservation system to include the additional 1% VAT. Guests with existing reservations with stays (or activities) from 1 April 2018 onwards, will be contacted and provided with updated documentation for their provisional or confirmed reservations. Updated documentation will reflect the revised reservation cost and outstanding balance. In instances where reservations were fully paid previously, guests can pay the difference, either on arrival in the relevant park or through the usual payment channels before arrival.