I'm hoping someone can help. I was wondering if anyone has experience with Gift Vouchers (retail) and how VAT should be applied. For example, say I have an online shop and I wanted to sell a R100 gift voucher. The voucher can be redeemed at a later stage and used against multiple or single purchases until the credit is used up. The problem is that I can't seem to find any information on how this is meant to work if you're VAT registered. The logical process is that the vouchers should be sold at 0% VAT. This is because when its redeemed and used, the sale of the items will attract VAT anyways. If VAT was applied to the sale of the voucher as well, it means you're paying double VAT. The problem is that I can't find any information on this on the SARS website to clarify.
The second question relates to the above. What happens if you giveaway a voucher in a promotion or competition? When the person comes to redeem it, the sale will attract VAT, but then you're paying VAT on top of the loss of the R100? This is the part I really don't have a clue how it's meant to be handled without it being a major loss to the company, and paying VAT on something you're essentially giving away. The only way that seems logical here is that promotional vouchers discount the overall sale. So, if you apply a R100 voucher to a R70 sale, it'll discount it by 100%, making the total R0 (and so 14% of R0), and leaving the user with the R30 credit left over.
I've approached SARS about this, but it's been 2 months now and no one seems to know the right answer. It's sitting with their legal team, but I'm not sure whether I'm going to get a response. I find it odd though, as this is a common thing in retail, yet there's absolutely no information (that I could find) about how it's meant to work
Any help would be most appreciated.