VAT420 for Motor Dealers Gets a Tune-Up in Issue 3

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If you're a motor dealer still operating on the 2016 VAT autopilot, it’s time for a pit stop. SARS has released the updated VAT420 Guide (Issue 3) packed with critical changes that come into effect from 4 June 2025.

Does It Apply To Me?

This guide applies to all VAT-registered motor dealers, including car dealerships, financiers selling vehicles under instalment credit agreements, and rental companies supplying motor vehicles in the ordinary course of business. If you sell, lease, or export vehicles—you’re in the driver's seat for compliance.

Here’s some of the changes:

• Trade-ins & Discount Vouchers
  Dealers must now follow more precise rules on how and when to deduct input tax for trade-in vehicles and vouchers—backed by robust documentation.

• Floorplan Finance Gets the Spotlight
  New clarity on VAT treatment when dealers don’t own their showroom stock. Floorplan arrangements are now explicitly detailed to avoid missteps.

• Export Rules Revamped
  New guidance separates direct from indirect exports, and outlines exactly what paperwork is needed to apply the zero rate. No proof? No 0% VAT.

• Tighter Documentation Demands
  VAT input claims and zero-rated supplies now come with stricter documentary requirements. SARS is raising the bar—be audit ready.

• New Insights on Consignment Stock & Demos
  There’s sharper focus on how VAT applies to consignment stock and vehicles used as demos.

The 2016 version is officially retired. Dealers must now comply with the 2025 guide to avoid costly penalties or disallowed VAT claims.