New proposed VAT rules could cripple independent schools - ISASA

702's John Perlman chats to Director of Legal, Policy and Government Relations at the Independent Schools Association of Southern Africa (ISASA), Tshepo Motsepe.

Listen to their conversation in the audio clip below:

"For that VAT liability to be paid back, unfortunately, that will have to come from fees. This will also have a negative impact on independent schools' ability to maintain and build infrastructure or engage in infrastructure projects in the long-term." 

- Tshepo Motsepe, Director of Legal, Policy and Government Relations - Independent Schools Association of Southern Africa (ISASA)

The Independent Schools Association of Southern Africa (ISASA) has raised the alarm over proposed tax law amendments that could force VAT-registered private schools to deregister - a move that would leave them with multimillion-rand VAT liabilities.

Motsepe warns that some schools may be required to repay VAT going back over a decade, potentially crippling their budgets and limiting their ability to build or maintain infrastructure.

Treasury's proposal, included in the draft Taxation Laws Amendment Bill, would change how educational services are treated for VAT purposes.

Currently, schools can reclaim VAT on commercial activities like renting out facilities or selling uniforms.

If these changes are passed, such claims would be disallowed.

Motsepe says this means schools would absorb those costs or pass them on to parents through higher fees.

He emphasises that this is not just an issue for elite private institutions, as many independent schools rely on limited income and provide essential education where the state has failed to build public schools.

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Scroll up to listen to the full conversation.