Deposits, VAT and the tourism levy: what accommodation and tour businesses must get right in 2026

Deposits: when they become income

A guest pays a deposit months before arrival. Two questions follow: is it income yet, and when is the VAT due?

For accounting, an advance is a liability until you have delivered the stay or tour. Record it as money received in advance, not as sales, so your profit is not overstated in the month of the booking. This also stops you spending money you may have to refund.

For VAT, the rules on when output tax is due are different. On 28 April 2026 SARS published two rulings. One concerned a game reserve that asked whether VAT is owed when a guest cancels and forfeits a deposit. As reported, SARS said:

• The deposit is consideration for the supply of accommodation.
• Output VAT is declared when the deposit is set off against the final booking payment, not when the deposit is received and not when the cancellation happens.
• A cancellation with a forfeited deposit does not require a credit note under section 21(1)(a) of the VAT Act, because the accommodation is treated as made available to the guest whether or not they arrive.

Binding rulings apply to the applicant who asked. Other businesses may not rely on them as law. They do show how SARS reads the rules, and they matter for anyone who takes non-refundable deposits. Read the ruling itself and ask your accountant before you change your treatment.

Foreign tourists: is anything zero-rated?

Many owners assume that a booking made and paid abroad is zero-rated. It usually is not. Services can be zero-rated when they are supplied to a non-resident and are not consumed in South Africa. But services that are physically provided to tourists while they are in the country, such as hotel accommodation, restaurant meals and local tours, are generally standard-rated at 15%. The Tax Court has confirmed that where a service is contracted with one party but physically rendered to another party in South Africa, the zero rate does not apply. This can still hold when a foreign agent pays.

Separately, foreign tourists can claim a VAT refund on goods they buy and take out of the country, through SARS's VAT refund process. That is a refund to the tourist on goods, not a change to how you charge VAT on your own services.

The line between zero-rated and standard-rated supplies can be fine, especially for packages that combine services. Get the treatment of each product right, and keep the evidence.

The tourism levy (TOMSA)

The Tourism Marketing South Africa (TOMSA) levy is 1% charged to tourists for specific tourism services. It is added to the bill and paid over. It is not a tax on your business and is not your income, so you may not keep it. Record it as an amount you hold for TOMSA and pay it over when it is due. Participation is voluntary, but if you collect it you must account for it properly.

Seasonality and cash

The gap between when a guest pays and when you deliver the stay drives your cash flow. A forecast that shows deposits, balances due, seasonal payroll and tax dates lets you plan for low season. Our guide to improving cash flow shows how to build one.

This article is general information for South African businesses. It is not tax, legal or financial advice, and it reflects the rules and figures at the date shown above. Tax rules change, so confirm the current position before you act. TBL's practitioners are registered tax practitioners.