Sars commissioner Edward Kieswetter has acknowledged the significant practical implications that the decision by finance minister Enoch Godongwana to reverse the planned half a percentage point VAT rate increase will have and has provided advice to vendors on how to proceed.
Business spent millions adjusting their systems to prepare for the increase which was due to take effect on May 1 and will now have to undo that work after this week’s announcement that the increase would be withdrawn.
Kieswetter said he understood the complexity and the confusion that has resulted from this process. “Sars will do its best to provide further clarity to create certainty of obligation for all vendors.”
He gave details of the measures that would apply to all VAT vendors with effect from May 1 and advised those who had not implemented the change in rate, to stop all developments in that regard.
He urged vendors who had already implemented both the rate changes and the zero-rating of the additional items announced by Godongwana in his budget to reverse these changes before May 1.
“Vendors are expected to charge VAT at the rate of 15% and not 15.5% for the relevant goods and services as per the VAT Act. Vendors may use limited time to adjust their systems accordingly and report and pay the VAT,” the commissioner said.
“Should a vendor not be able to revert to the 15% rate due to complex system changes that may be needed, such supplies and purchases must be reported and accounted for at the 15.5% rate until such time that they are able to make the necessary system adjustments which should be completed by no later than May 15.
“VAT transactions which were charged at 15.5% must be reported in field 12 (for output tax) and field 18 (for input tax) of the VAT return.
“Adjustments in the form of refunds of the 0.5 percentage point rate to customers and from suppliers must equally be reported in fields 12 and 18 respectively.”
Kieswetter said VAT return declarations made would be taken into consideration when verifications and/or audits on the affected VAT tax periods were conducted. The VAT returns that are to be submitted would continue to calculate the VAT auto calculation using the 15% rate from tax periods or months commencing May 1.
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