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Apportionment – A new dawn
- 11 December 2025
- VAT
- Christo Theron
When SARS issued the long-awaited Binding General Ruling 16 (Issue 3) many VAT vendors sighed a sigh of relief as a number of contentious issues were clarified in the BGR. But appearances can often be deceiving. There are still a number of technical issues in the BGR that are expected to provide more challenges in practice. This article touches on the new rules.
The general rules
For a VAT vendor that only makes limited categories of non-taxable supplies, the apportionment rules contained in the BGR are unlikely to present significant challenges.
They are however elements, especially the treatment of dividends and interest received, that require special attention.
The good news is that the full amount of dividends and interest is no longer required to be included in the apportionment computation. The amounts to be included are significantly diluted, but does require some level of mathematical gymnastics to quantify.
More complex rules
There are a number of complex rules incorporated into BGR 16, especially with regard to the treatment of financial transactions. VAT vendors operating in this field of business must be particularly wary of these new requirements.
Transitional rules
BGR 16 also contains detailed transitional rules governing the transition from the old rules to the new and the adjustments that must be made.
A deep understanding of these rules is essential to ensure compliance with the new rules.
New reporting requirements
BGR 16 requires a VAT vendor applying apportionment to provide SARS on an annual basis with the new computed apportionment percentage and the adjustments for the year made as a result thereof.
This has not been a requirement before and cannot be taken lightly.
The upcoming webinar
In the upcoming webinar we shall deal with the general content of BGR 16, the more complex issues and the new compliance requirements.
This is a must attend for any person responsible for the VAT function in an organisation or who consults to clients on VAT issues.