Time is running out for nonexecutive company directors to register for and charge value-added tax (VAT). They will have to charge VAT for any fees they earn after June 2017 after the South African Revenue Service (SARS) issued a binding general VAT ruling early in May, which clarifies the activities considered to fall within the definition of "enterprise" requiring VAT registration. In 2007 some changes were made to the definition of remuneration in the Income Tax Act, causing the uncertainty about whether nonexecutive directors are employees (receiving remuneration) or independent contractors (providing services as an enterprise). Following consultation, it has now been decided that these directors are "independent contractors" and any fees paid to them are not regarded as remuneration. Ferdie Schneider, head of tax at BDO, says as a result, director’s fees paid or payable to a director are not regarded as remuneration and the director is treated as an independent contractor. The e...
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