The South African Revenue Service issued guidance on the value added tax (VAT) treatment of fees paid to non-executive directors. On 10 February 2017, SARS issued binding general ruling (BGR) 41 which confirms that a non-executive director (NED) who carries on an enterprise in or partly in South Africa is required to register and charge VAT in respect of any director’s fees earned for services rendered as an NED if the value of such fees exceeds R1 million in any consecutive 12-month period.

A NED is required to register and charge VAT on fees with effect from 1 June 2017. In addition, a NED may also choose to register for VAT on a voluntary basis where the fees earned are a minimum of R50 000 in a 12-month period. SARS has been receiving several operational queries regarding the VAT registration process and in particular, practical considerations for non-resident NEDs.