SARS VAT Ruling on Zero-Rating of Medical Insurance for Offshore Employees

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A separate VAT ruling from SARS brings welcome clarity to the treatment of international medical insurance. Here’s what it means for insurers and advisors offering medical cover to foreign employees. In Ruling 013 SARS confirms that premiums paid for medical health insurance policies provided to foreign employers, covering their offshore employees and dependents, qualify for zero-rating under section 11(2)(l) of the VAT Act.

The following conditions apply:

• Services must be supplied directly to a foreign employer.

• Beneficiaries and employers must be outside South Africa during service delivery.

• Sufficient documentary proof must be retained.

Why zero-rating is important?

Zero-rating allows insurers to charge 0% VAT on qualifying services while still claiming input VAT on associated expenses boosting competitiveness and cash flow. For example if a South African insurer sells a policy to a foreign employer for their staff based overseas, SARS now permits zero-rating that policy. This means the insurer doesn’t have to charge VAT but can still recover VAT on operational costs.

Why it matters to you

If your client offers international medical insurance, they can now zero-rate premiums billed to foreign employers—improving their competitive pricing and VAT efficiency.

The next steps

• Review your client base to identify businesses affected by these rulings.

• Adjust VAT apportionment methods and reporting accordingly.

• Use SARS-approved variations to maximise VAT recovery.

• Advise insurers on new zero-rating opportunities for global products.

Stay ahead, CIBA members get first-hand guidance on SARS rulings. Make sure your clients, and your practice stay tax-efficient and compliant.