In terms of paragraph 2 of Schedule IV (Exempt Supplies) to the VAT act (Act No 10 of 2000), the following services are exempt:

"'financial services' means - ....
(g) provision, or transfer of ownership, of an interest in a scheme whereby provision is made for the payment or granting of benefits by a benefit fund, provident fund, pension fund, retirement annuity fund or preservation fund; or....
(i) the arranging of any services referred to in paragraphs (f) to (h), inclusive, or the management of any fund or entity referred to in paragraphs (g) and (h);..."

Although this is open to interpretation, particularly as regards consulting services (i.e. asset or benefit consulting services), our view is that the services to be provided by your consultant to your fund may well be covered by this definition and would then be VAT exempt. We are aware of a Practice Note issued by Inland Revenue with regard to medical aid funds, specifically excluding IT services provided under a separate agreement, but believe that this Practice Note (No 7 of 2000) is not necessarily to be seen as guidance in this context.

Funds that are not registered for VAT cannot claim input VAT. Paying VAT on services that may fall under the definition of sub-paragraph (i) of the definition of 'financial services' would unnecessarily add to the cost burden of members and should avoided.

Important notice and disclaimer
This article summarises the understanding, observation and notes of the author and lays no claim on accuracy, correctness or completeness. Retirement Fund Solutions Namibia (Pty) Ltd does not accept any liability for the content of this contribution and no decision should be taken on the basis of the information contained herein before having confirmed the detail with the relevant party. Any views expressed herein are those of the author and not necessarily those of Retirement Fund Solutions.