Spar, one of SA’s biggest grocery retailers, says it is prepared to implement the upcoming VAT rate increase, which takes effect in May.
The retailer, which operates more than 2,500 stores across SA, said it has put systems and teams in place to ensure that the transition to the 15.5% VAT rate will be carried out efficiently and without causing disruption for customers.
A cross-functional project team has been established, bringing together expertise from Spar’s technical services, operations, merchandise, marketing and finance departments.
This team, according to Spar national merchandise executive Gerhard Ackermann, is tasked with overseeing the implementation process and ensuring that price labels, systems and promotional materials are updated swiftly and correctly.
Ackermann said all stores have been instructed to change price labels as quickly as possible to comply with the new legislation. In preparation for the increase, Spar has also reviewed and adjusted its pricing strategies and promotional materials.
“Our stores are required to change price labels to ensure compliance with the current change in legislation. Changes must be made as quickly as possible as to not inconvenience our valued customers,” he said.
The company said it is also rolling out several initiatives aimed at helping customers save money during this period of transition. These include reducing base prices on select items and introducing stronger promotions designed to stretch customer budgets.
Other major retailers, including Clicks and Oceana, also confirmed they are preparing for the change.
Our stores are required to change price labels to ensure compliance with the current change in legislation. Changes must be made as quickly as possible as to not inconvenience our valued customers.
— Gerhard Ackermann, Spar national merchandise executive
“Clicks will implement the VAT rate increase as required and on time and has well-documented processes from previous VAT rate increases to ensure that all systems changes have been made timeously to accommodate the increase,” a Clicks spokesperson said.
Oceana flagged the looming court battle but maintained it would comply with the orders of the National Treasury, nonetheless.
“Since the budget, Oceana has been preparing to levy any VAT increase that is legislated. We are, however, monitoring reports that the proposed increase is being challenged in court,” the company said.
While Spar and other retailers prepare to meet the deadline, uncertainty still lingers about the legal and legislative framework surrounding the VAT increase. The 0.5 percentage point increase from 15% to 15.5% was announced by finance minister Enoch Godongwana during his budget speech in March. It follows the approval of the fiscal framework by parliament and the publication of the related notice in the Government Gazette.
Legal experts at ENS have noted that despite public opposition and political debate, the VAT increase is likely to proceed as planned.
According to ENS, the only possible delay would come from a high court interdict, which has not yet materialised.
ENS warned that the compliance burden of implementing a new rate is substantial.
“It is clear that the legislation does not contemplate a situation where parliament might not pass an increase within 12 months after implementation of the new rate. Vendors are thus advised to continue to prepare for the VAT rate increase to 15.5% effective May 1 2025,” the law firm said.
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