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Tax-related material on a desk.
The South African Revenue Services (SARS) has urged Value Added Tax (VAT) vendors, including retailers, to continue charging the 15% VAT rate.
Commissioner Edward Kieswetter says in a statement that SARS recognises the significant impact that the decision to reverse the 0.5 percentage point increase will have on VAT vendors and consumers.
SARS says it acknowledges that vendors and consumers have invested in preparing for an increase in VAT during a period of uncertainty.
It says vendors are expected to continue to charge VAT at the rate of 15% and not 15.5% for the relevant goods and services.
The revenue collection agency has advised vendors to use the limited time available to adjust their systems accordingly. It says VAT vendors who have not implemented the change in rate should stop all development in this regard.
“Vendors who have already implemented both the rate changes and the Zero-Rating are advised to reverse those changes before the 1st of May,” reads the statement.
SARS states that if a supplier is unable to revert to the 15% rate in a timely manner due to complex system changes, such supplies and purchases must be reported and accounted for at the 15.5% rate until they are able to make the necessary system adjustments. These should be completed no later than May 15.
Parliament
Meanwhile, Executive Director at the Parliamentary Budget Office, Dr Dumisani Jantjies, says documents that were tabled in Parliament by Finance Minister Enoch Godongwana indicate that VAT would remain at 15%.
The Office was set up to provide independent, objective and professional advice and analysis to Parliament on matters related to the Budget and other money Bills.
R75-billion shortfall
Godongwana on Thursday tabled the Rates Bill, responsible for setting out different kinds of taxes and an important process as part of the Parliamentary procedure to process all documents related to the budget.
The proposed VAT increase has ruffled feathers with the DA and EFF applying to interdict it in court and some other parties in Parliament voting in support of it, with conditions that the proposal would be revised within 30 days.
There is now some uncertainty on exactly what changes the minister will table to Parliament for the R75-billion shortfall over the next three financial years that would have come from the VAT increase.
Labour Federation, Cosatu, has welcomed this. Its parliamentary officer, Matthew Parks, emphasizes that no business can charge extra VAT from next month.
“The fact that the minister of finance has indicated to withdraw that should be sufficient indication to businesses not to proceed with the VAT hike, also the instruction made to the South African revenue service, we think that in most instances it should be sufficient for businesses not to proceed with the VAT hike.”
