What would be the normal tax and VAT consequences of the Income earned from the contract with the Namibian Ministry of EducaBon, Arts and Culture for the year ended $29$ February $2022.$ "Pudding Ltd$,$ a publicly traded company listed on the Johannesburg Stock Exchange, is South Africa$$s largest manufacturer of toys. The company caters for ages $0-18$ years across recreational and educational toys. Pudding has been a registered category C VAT vendor since inception. Pudding has a branch in Windhoek, Namibia which was opened in $2015$ as part of the company$$s strategy to penetrate the African market. The branch has been showing considerable growth over the years. At the recent strategic meeting, one of the directors of Jello pointed out an article from the UNICEF which exposed the global issue of children$$s inability to read and understand a simple written story.

The management of Pudding identified this issue as an opportunity for the company to approach the Namibian government with a solution to this global predicament. The proposal from Jello stated that the company would supply $100000$Talking Activity Books$$ to the Namibian Ministry of Education, Arts and Culture, which would be distributed to several selected Early Childhood Development $($ECD$)$ Centers in Windhoek. The $$Talking Activity Book$$ is an interactive book with learning activities, it also includes sound effects to assist children with pronunciation of certain words and music to make learning a fun activity. This book has been designed to aid in the early development of children and make them more confident in their reading and writing abilities, without depriving them of the fun element.

On $1$ January $2022$ Pudding was awarded the contract by the Namibian Ministry of Education, Arts and Culture and they commenced manufacturing the products soon thereafter. The total value of the contract was R$10000000$ correctly translated, and the agreement was that payment would be made in $3$ tranches. The first payment of R$1000000$ was made upon the commencement of the contract. The second payment of R$7500000$ was made on the date that Pudding delivered all the books, $30$ September $2022.$ There is a memorandum from the company directors which states that R$500000$ of the second payment would be used to purchase computers to be donated to $5$ Cape Town high schools. The remaining balance will be paid if there have been no issues reported by the ECD Centers within the first $6$ months after delivery. There were no faults reported by $29$ February $2023."$