Skills-Universe

VAT or No VAT on Invoice for providing training on a Learnership

Can anyone answer my dilemma: We are a lead training provider on an NVC learnership and now have to raise an invoice on the Lead Employer for the training services. The Lead Employer says that the invoice must be Zero rated for VAT but our auditers say that VAT must be added to the invoice. Which is correct - we don't want to fall foul of SARS?

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We do a lot of learnership and I have always prepared qoutation with VAT, reasons for this is: the claiming for clients on TAX rebate, the VAT has to be paid to SARS. The question is did you price excluding or including VAT?

Hi Jean,
If your business is VAT registered vendor you are required to issue an invoice including VAT. Government departments are VAT exempted for skills development fees.

Hi Jean

We had the same dilemma a year ago. We invoiced the employer with VAT as we are VAT vendors. This is a requirement of SARS - if you are registered for VAT, you must charge VAT.

In the case of the learnership, the Employer needs to carry the VAT costs, as this is usually the only cost they have.

Hoping this helps.

 

Yep !! I have had this fight several times with the SETAs. The SETA claim they are not a VAT vendor so you will never get VAT from them. You on the other hand are probably registered for VAT - so then you have to claim and pay VAT. What has happened to me is that I had to invoice the amount the SETA gives (no VAT) and then pay the VAT on that. So you are always losing 14%. The employer on the other hand can claim the VAT you invoice back so they should pay the VAT. I suppose you need to clear these things up at the start with the employers. I don't know if anyone else has had any joy with this

It could be that someone is assuming that the learnership is an NQF level 2 or higher qualification. If it is, then the provider should by rights be a provisionally regisitered Private FET college, in which case the service rendered becomes VAT zero rated.   



Johan Venter said:

It could be that someone is assuming that the learnership is an NQF level 2 or higher qualification. If it is, then the provider should by rights be a provisionally regisitered Private FET college, in which case the service rendered becomes VAT zero rated.   

Hi Johan,

I was not aware of this fact. So our company is registered with DHET and the Learnership is at NQF level 4. Does this mean that we are then Zero rated for VAT to provide the training for the learnership? The SETA has sent us a document showing that they are Zero rated for discretionary funding but this funding was paid over to the Lead Employer on the strength of their Zero rated invoice. We now have to raise an invoice for the payment for the training and as we are a VAT vendor - I think we should charge VAT on the invoice. The Lead Employer will be able to claim the VAT back on their VAT return - not so???

 

Jean du Plessis

Hi Jean,

We always charge VAT for invoices raised to our debtors for learnership fees as both parties are VAT registered vendors.

My understanding is as follows:

When the party who is contracted to the SETA invoices there is no VAT applicable as you cannot charge a tax on a tax. However all the subsequent invoices raised by secondary parties have to have VAT charged on them if the supplier is VAT registered.

This is the manner in which it was explained to me by the CFO of one of the SETAs when I queried the same matter.

You should revisit your SLA and clarify what it say in relation to whether or not your amount includes or excludes VAT.

That the VAT is invoicable is not under dispute based on the above statments.

 

 

 Thanks very much for all your answers. I think it is quite clear now:

The SETAs are Zero rate for VAT and any invoices raise against them must be without VAT. Any other invoices relating to the Learnership between other parties i.e Lead Employer and Lead Training Provider are to include VAT.

I will pass this on to our Lead Employer.

Many thanks everyone!

I have the same problem, where the actuul quote excluded VAT as I had to meet the budgetray constraints of the client in the initial set-up. The project start-up cost were paid directly buy the client to get provisional accreditation and compliance. Now, the challenge is how do I then convince the client once the discretionary grant is offered to cover vat costs? However,  I like Werner's view that client must cover VAT costs as this ias the only cost they will to carry

 Sorry, I used the wrong word - this service is not not zero rated; it is VAT exempt. The following is an extract from the VAT Guide for Vendors dated 6 September 2011, obtainable from the SARS website.

 6.5 EDUCATIONAL AND CHILDCARE SERVICES

The supply of educational services by the following entities is exempt from VAT:

• All State schools or schools registered under the South African Schools Act, 1996 or a Further Education and Training institution registered under the Further Education and Training Act, 1998.


Johan Venter said:

It could be that someone is assuming that the learnership is an NQF level 2 or higher qualification. If it is, then the provider should by rights be a provisionally regisitered Private FET college, in which case the service rendered becomes VAT zero rated.   

 

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