An efficient advertising campaign is often the difference between a successful and an unsuccessful business venture. However, when advertising the price of their products, businesses must observe the Value Added Tax (VAT) Act (89/1991). The Advertising Standards Authority of South Africa (ASA) Directorate recently addressed this matter in its November 18 2016 ruling in Security Outfitters Safety Gear/L Munian (2016-4420F).


Munian lodged a consumer complaint regarding a print ad for safety wear sold by the respondent, Over-All Gear CC. The respondent's ad featured different ranges of security uniforms, reflective jackets, safety boots and conti suits. "Prices valid until stocks last. Prices excluding VAT", was included at the bottom of the ad.

The complainant objected to the fact that the advertised prices excluded VAT. The respondent submitted, among other things, that it:

  • was a registered VAT vendor;
  • was charged VAT in all stock manufacturing and purchasing processes; and
  • was therefore entitled to charge VAT on its prices.

For these reasons, the respondent's advertising clearly indicated that its prices excluded VAT, so that there could be no confusion. In support of this argument, the respondent cited other safety wear companies that exclude VAT and provided a copy of its VAT registration documentation from the South African Revenue Service (SARS).


In terms of Section II, Clause 19.4 of the ASA Advertising Code of Practice, Sections 64 and 65 of the VAT Act had to be considered. Section 64(1) of the VAT Act states that any price charged by a vendor for a taxable supply must for the purposes of the VAT Act be deemed to include any VAT that is to be levied on such supply under Section 7(1)(a). Section 65 of the VAT Act states that:

  • any price advertised or quoted by a VAT vendor must include VAT; and
  • the vendor must state in the ad or quote that the price includes VAT, unless the following are advertised or quoted:
    • the total amount of VAT in accordance with Section 7(1)(a); and
    • the prices excluding and including tax.

Section 65 further states that if a VAT vendor separately advertises or quotes the total amount of VAT and the prices excluding and including VAT, both prices must be advertised or quoted with equal prominence and effect.

In its ruling, the ASA Directorate referred to the matter of Republic Bus & Truck/W Heckroodt (18961, February 2 2012), in which SARS had clarified, among other things, that:

  • the practice of reflecting only a price excluding VAT in an ad does not comply with Section 65 of the VAT Act; and
  • it is not permissible to quote the price excluding VAT and have a statement that VAT has been excluded.

In light of this, the ASA Directorate found that the mere inclusion of a statement to the effect that prices exclude VAT is not compliant with the VAT Act, which in turn means that such advertising contravenes Section II, Clause 19.4 of the ASA Advertising Code of Practice. The fact that the respondent was registered for VAT and entitled to charge VAT was irrelevant.

The ASA Directorate therefore upheld the complaint and ordered that:

  • the advertising be withdrawn;
  • the process to withdraw the advertising be done with immediate effect on receipt of the ruling;
  • the withdrawal of the advertising be completed within the deadlines stipulated by Clause 15.3 of the ASA Procedural Guide, which states that the time within which an ad must be withdrawn depends on where it appeared (eg, in newspapers or on the radio); and
  • the advertising was not to be used in its existing format.


In its ruling, the ASA Directorate noted that the respondent's practice is relatively widespread in the safety gear industry, but that it could not impose its ruling on other advertisers, as it can act on complaints against only one advertiser at a time. Taxpayers that are undertaking this practice should therefore take heed of this ruling and amend their advertising accordingly, so as to prevent themselves from appearing before the ASA in future. Although Section 58 of the VAT Act does not list the abovementioned practice as an offence for which a taxpayer could pay a fine or face imprisonment, a taxpayer could suffer reputational damage if it is found to have contravened this provision and the issue becomes public.

For further information on this topic please contact Louis Botha at Cliffe Dekker Hofmeyr by telephone (+27 115 621 000) or email ([email protected]).The Cliffe Dekker Hofmeyr website can be accessed at www.cliffedekkerhofmeyr.com.