The challenges of value-added tax compliance provisions for non-profit organisations : an explorative study

Abstract

The non-profit sector plays a vital role in addressing developmental challenges including poverty, unemployment and inequality. To enable the developmental mandate of the non-profit sector, Government incorporates tax reliefs in legislation as behavioural incentives. But, despite government's objective to create an empowering platform for NPOs through tax incentives, the legal framework for the taxation of non-profit organisations, especially in terms of VAT, is complex and multi-layered. The complexities of current legislation relevant to NPOs paired with the inherent limitation of financial and technical resources is limiting government's aim to create an enabling environment for these entities to flourish. The challenges are a result of both the inherent nature of the NPO sector as well as legislative challenges and shortcomings and includes limitations in terms of technical and financial resources, tax policy intent, classification of project activities, definition of income and related VAT treatment and claiming of inputs and allocation.

Die nie-winsgewende sektor speel 'n belangrike rol in die stryd teen ontwikkelingsuitdagings, insluitende armoede, werkloosheid en ongelykheid. Om die ontwikkelingsmandaat van die nie-winsgewende sektor te stimuleer, stel die regering deur wetgewing belastingverligting vir die sektor in. Maar ten spyte van die regering se doel om 'n bemagtigingsplatform vir die nie-winsgewende sektor te skep deur belasting vrystellings, is die wetlike raamwerk vir belasting van nie-winsgewende organisasies, veral ten opsigte van BTW, kompleks. Die kompleksiteite van huidige wetgewing in terme van BTW, wat gepaard gaan met die inherente beperking van finansiële en tegniese hulpbronne, beperk die regering se doel om 'n bemagtigende omgewing te skep vir hierdie entiteite om te floreer. Die uitdagings is die gevolg van beide die inherente aard van die nie-winsgewende sektor, sowel as wetgewende uitdagings en tekortkominge en sluit in beperkings ten opsigte van tegniese en finansiële hulpbronne, belastingbeleid, indeling van projekaktiwiteite, definisie van inkomste en verwante BTW-behandeling en aanspraak making op insette en toekennings.