SARS urges businesses to revert vending systems to 15% VAT rate

CAPE TOWN – The South African Revenue Service (SARS) is urging businesses to revert their vending systems to the 15% value-added tax (VAT) rate where possible before 1 May. 

SARS has set 15 May as the deadline for vendors to revert their systems to the 15% rate. 

In light of Finance Minister Enoch Godongwana’s announcement that he was retracting the 0.5% percentage point hike following pressure from political parties, SARS said this would have significant practical implications for VAT vendors and consumers.

It has now set out several directives for businesses on how they should treat this period of uncertainty. 

While clarity is still awaited from the Treasury on how a new budgetary process will unfold in light of the withdrawal of key money bills, including that on VAT, SARS said it would make the necessary adjustments on its side to accommodate this change. 

SARS commissioner Edward Kieswetter said he was mindful that vendors and consumers have invested in preparing for an increase. 

He’s advised VAT vendors who have not yet implemented the change in rate not to proceed. 

This also applies to the zero-rating of food items.

On Thursday, the finance minister introduced a new bill to parliament to reverse the impending VAT hike, but this is still subject to parliament’s own processes that could extend beyond 1 May. 

SARS said should a vendor not be able to revert to the 15% rate due to complex system changes that may be needed, they would need to report such supplies and services at the higher rate to the revenue service. 

Businesses will also have to report any refunds to customers and suppliers to SARS.