Since the last issue of VAT Connect (No. 7 – December 2017), various amendments affecting the VAT Act and the administration thereof have been made. For more details on recent amendments, refer to the following documents, amongst others, on the SARS website under “Legal Counsel”:
- The Taxation Laws Amendment Act 17 of 2017 and Tax Administration Laws Amendment Act 13 of 2017 which were promulgated on 18 December 2017;
- Explanatory memoranda relating to the above amendment acts; and
- The Rates and Monetary Amounts and Amendment of Revenue Laws Act 14 of 2017 which was promulgated on 14 December 2017.
The response documents relating to the proposed amendments for 2018 which were published by National Treasury and SARS for public comment on 14 July 2017 have also now been published as final. These documents can be found on the “Legal Counsel” page on the SARS website.
The following documents proposing further amendments were also published for public comment by 22 March 2018 as announced during the Minister of Finance’s Budget Speech on 21 February 2018.
- 2018 Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill
- Draft Amendments to Regulations prescribing electronic services
- Consolidated Regulations after Draft Amendments to Regulations prescribing electronic services
- Draft Explanatory Memorandum-Regulations prescribing electronic services
In this issue of VAT Connect, we will focus on alerting the public to the announcement and implications of the increase in the standard rate of VAT from 14% to 15%, as there are only a few days left to get ready for the change. In the next issue if VAT Connect, we will highlight some of the other important amendments.
In the Minister of Finance’s Budget Speech on 21 February 2018 the proposal to increase the standard rate of VAT from 14% to 15% with effect from 1 April 2018 was announced. Whilst the increase is not yet law (it is included in the 2018 Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill), vendors and the public at large should prepare themselves for the change to be implemented as proposed.
Two documents were published on 21 February 2018, namely, Frequently asked questions: Increase in the VAT rate (FAQs) and Pocket guide on the VAT rate increase on 1 April 2018 (Pocket Guide) to provide assistance to vendors and the public at large with some of the questions that might arise as a result of the proposed increase during the transition period (the time period between the date of the announcement and the date of implementation of the increase). An updated version of the FAQs was also published on 23 March 2018.
The Pocket Guide briefly covers some of the most important rules that you will need to be aware of during the transitional period, for example, when entering into contracts, determining whether you can increase your prices, deciding on the correct VAT rate to charge etc. More importantly, the Pocket Guide will alert you to some of the more important administrative actions and business processes that need to be considered in preparing your business for the increase in VAT. For example, you will need to review your business systems and accounting processes to make sure that the increase in the VAT rate can be implemented smoothly.
The FAQs provide more detail than the Pocket Guide in explaining some of the rules. They also provide guidance to vendors on some of the practical situations that could arise. For example, they explain whether you are legally entitled to increase your existing contract prices, what arrangements are in place regarding in-store displaying of prices during the transitional period and how the rate specific rules are applied so that you can establish if the old rate of 14% or the new rate of 15% must be applied in any particular situation.
The FAQs document provides an e-mail address [email protected] to which you can send your enquiries. Please note, however, that we have found that the FAQs document addresses most of the questions that we have received from the public up to now.
Please therefore note the following in this regard:
- We urge the public to first peruse the FAQs document on the SARS website as it is very likely that your question is addressed in that document.
- If you find it necessary to send an enquiry and the issue is in fact dealt with in the FAQs, the response from SARS will be to merely refer you to the relevant FAQ. If you find that the relevant FAQ does not fully address your situation, then please ensure that you provide a full description of the facts and circumstances to enable SARS to properly consider your question.
- Enquiries sent to [email protected] should be strictly limited to issues about the increase in the VAT rate from 14% to 15%. You will not get a response if the enquiry relates to any other matter.
VAT Connect is an information guide and not a binding general ruling for purposes of the VAT Act. For general enquiries regarding VAT call the SARS Contact Centre on 0800 00 7277. Should there be any aspects relating to VAT on which a specific VAT ruling is required, you may apply for a ruling by completing form VAT301 and sending it together with all the necessary information to SARS by facsimile on +27 86 540 9390 or by e-mail to [email protected]. Refer also to the Quick Reference Guide on VAT Ruling Application Procedure for more details on how to apply for a ruling.