Client Alert: SARS issues guidance on ambulance services
Client Alert: SARS issues guidance on ambulance services
New SARS guidance limits reliance on the passenger transport exemption for ambulance-related supplies.
SARS has released Binding General Ruling (VAT) 75 on the VAT treatment of ambulance services. The ruling is best understood against the background of SARS’ previous guidance on the section 12(g) exemption, including VAT Practice Note 7 and the later draft interpretation note dealing with transport services. That earlier guidance addressed exempt domestic passenger transport by road or rail and recognised that a fare may be paid by someone other than the passenger. In practice, this left some uncertainty about whether patient transport by ambulance could fall within the exemption. BGR 75 resolves that uncertainty by making clear that an ambulance service is not exempt passenger transport simply because the patient is conveyed from one place to another.
The earlier SARS materials were not directed specifically at emergency medical transport. VAT Practice Note 7 considered the passenger transport exemption in the context of operators carrying fare-paying passengers, while SARS’ draft interpretation note discussed the requirements for exempt domestic transport services more broadly. BGR 75 now deals with the ambulance context directly and separates ordinary passenger transport from a service whose essential character is medical response or medically supervised transfer.
What does BGR 75 say?
The key point in BGR 75 is that an ambulance service is not characterised solely by the physical movement of the patient. The service is ordinarily required because the patient needs emergency assistance, clinical support, monitoring, stabilisation or transfer under medical supervision. SARS therefore treats the transport element as part of a wider healthcare-related service, rather than as the supply of exempt passenger transport.
Accordingly, where a registered vendor supplies ambulance services in the course or furtherance of its enterprise, the supply will generally be subject to VAT at the standard rate unless a separate exemption, zero-rating or other relieving provision applies on the facts.
Why this matters for clients
The ruling is relevant to ambulance operators and to organisations that fund, arrange or reimburse ambulance services, including healthcare groups, medical schemes, insurers, employers and event organisers. It may also be relevant to vendors that have not historically accounted for output tax on the basis that the service was treated as exempt.
More broadly, the ruling illustrates the need to identify the true nature of a supply before applying a VAT exemption. A service does not qualify for an exemption merely because one component resembles an exempt activity; the statutory language, purpose of the exemption and commercial character of the supply must all be considered.
VAT considerations
Suggested next steps
SARS has released Binding General Ruling (VAT) 75 on the VAT treatment of ambulance services. The ruling is best understood against the background of SARS’ previous guidance on the section 12(g) exemption, including VAT Practice Note 7 and the later draft interpretation note dealing with transport services. That earlier guidance addressed exempt domestic passenger transport by road or rail and recognised that a fare may be paid by someone other than the passenger. In practice, this left some uncertainty about whether patient transport by ambulance could fall within the exemption. BGR 75 resolves that uncertainty by making clear that an ambulance service is not exempt passenger transport simply because the patient is conveyed from one place to another.
The earlier SARS materials were not directed specifically at emergency medical transport. VAT Practice Note 7 considered the passenger transport exemption in the context of operators carrying fare-paying passengers, while SARS’ draft interpretation note discussed the requirements for exempt domestic transport services more broadly. BGR 75 now deals with the ambulance context directly and separates ordinary passenger transport from a service whose essential character is medical response or medically supervised transfer.
What does BGR 75 say?
The key point in BGR 75 is that an ambulance service is not characterised solely by the physical movement of the patient. The service is ordinarily required because the patient needs emergency assistance, clinical support, monitoring, stabilisation or transfer under medical supervision. SARS therefore treats the transport element as part of a wider healthcare-related service, rather than as the supply of exempt passenger transport.
Accordingly, where a registered vendor supplies ambulance services in the course or furtherance of its enterprise, the supply will generally be subject to VAT at the standard rate unless a separate exemption, zero-rating or other relieving provision applies on the facts.
Why this matters for clients
The ruling is relevant to ambulance operators and to organisations that fund, arrange or reimburse ambulance services, including healthcare groups, medical schemes, insurers, employers and event organisers. It may also be relevant to vendors that have not historically accounted for output tax on the basis that the service was treated as exempt.
More broadly, the ruling illustrates the need to identify the true nature of a supply before applying a VAT exemption. A service does not qualify for an exemption merely because one component resembles an exempt activity; the statutory language, purpose of the exemption and commercial character of the supply must all be considered.
VAT considerations
- Output tax: Suppliers should confirm whether VAT must be charged on ambulance services that were previously billed as exempt.
- Pricing impact: Contracts and fee schedules should be reviewed to determine whether VAT is recoverable in addition to the agreed consideration or absorbed within the agreed price.
- Input tax: If the supply is taxable, the vendor’s input tax position may change, subject to the normal documentary and apportionment rules.
- Historical position: Prior VAT periods should be reviewed to identify any corrections, disclosures or SARS engagement that may be required.
Suggested next steps
- Identify affected services: Compile a list of ambulance-related supplies, reimbursements and procurement arrangements.
- Confirm the VAT classification: Reassess whether each category of supply is taxable, exempt or outside the scope of VAT.
- Align systems and documents: Update VAT codes, invoice wording, rate cards and billing processes where necessary.
- Review contractual clauses: Determine whether VAT can be passed on to customers, schemes, insurers or other funders.
- Evaluate prior periods: Consider whether historic VAT returns, claims or disclosures need to be addressed.
- Maintain support: Keep a record of the analysis, the relevant SARS guidance and the basis for the VAT treatment adopted.