Latest news with #AmendmentofRevenueLawsBill
The South African
27-04-2025
- Business
- The South African
Here's what SARS had to say about the VAT hike reversal
The South African Revenue Service (SARS) has confirmed that it will implement Finance Minister Enoch Godongwana's decision to reverse the planned 0.5% increase in Value-Added Tax (VAT), which was initially set to come into effect on 1 May 2025. SARS Commissioner Edward Kieswetter acknowledged the Finance Minister's announcement, noting the 'significant practical implications' for both VAT vendors and consumers. In a statement, Kieswetter stressed that SARS, as the administrator of national tax measures, would ensure the necessary adjustments are made promptly. The reversal follows the Minister's media statement and the publishing of Government Notice No. 6157 of 24 April 2025, alongside the Rates and Monetary Amounts and the Amendment of Revenue Laws Bill, which Parliament is expected to pass shortly. Vendors who have not yet implemented the 15.5% VAT rate should immediately stop any system changes. any system changes. All vendors must charge VAT at 15% for goods and services in line with the VAT Act from May 1, 2025. for goods and services in line with the VAT Act from May 1, 2025. Vendors unable to adjust their systems immediately may continue charging 15.5% until no later than May 15, 2025 but must report these correctly on VAT returns. but must report these correctly on VAT returns. VAT charged at 15.5% must be reported in Field 12 (output tax) and Field 18 (input tax) of the VAT return. and of the VAT return. Refunds or adjustments related to the 0.5% overcharge must also be reflected in Fields 12 and 18. The VAT return system will auto-calculate VAT at 15% for all tax periods starting on or after May 1, 2025. for all tax periods starting on or after May 1, 2025. Vendors who have already fully implemented both the 15.5% rate and any associated zero-rating are encouraged to reverse these changes before May 1. Kieswetter acknowledged the confusion the reversal has caused, stating: 'We understand the complexity and confusion that has resulted from this process. SARS will do its best to provide further clarity to create certainty of obligation for all vendors.' The VAT rate adjustment process comes after a period of public uncertainty and Parliamentary debate. SARS has promised to support vendors through the transition with further guidance as necessary. Vendors and taxpayers are urged to stay updated via official SARS communications as the May 1 deadline approaches. Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1 Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
The Citizen
25-04-2025
- Business
- The Citizen
Practical implications of reversing the 0.5% VAT increase
All shops and other entities that charge VAT had to quickly get their systems ready for the VAT increase and must now reverse the process. The decision by finance minister Enoch Godongwana to reverse the VAT increase of 0.5% that was supposed to come into effect on 1 May as well as the 0.5% increase next year, has several practical implications. Edward Kieswetter, commissioner of the South African Revenue Service (Sars), says the decision has significant practical implications for VAT vendors and consumers and that Sars will ensure the necessary adjustments are made to accommodate this change. He also acknowledges that vendors and consumers have invested in preparing for an increase in VAT during a period of uncertainty from Parliament's deliberations and public comments. ALSO READ: Budget 3.0 not unexpected, possible decrease in social grant increase Measures for VAT vendors from 1 May According to the media statement announcing the reversal of the VAT increase and Government Notice No 6157 of 24 April 2025 published in the Government Gazette introducing the Rates and Monetary Amounts and the Amendment of Revenue Laws Bill, these measures will apply to all VAT vendors with effect from 1 May 2025.: VAT vendors who have not implemented the change in rate must stop all development in this regard. Vendors are expected to charge VAT at the rate of 15% and not 15.5% for the relevant goods and services according to the VAT Act. Vendors can use limited time to adjust their systems accordingly and report and pay the VAT. Vendors who are unable to revert to the 15% rate due to complex system changes that may be needed must report and account for supplies and purchases at the 15.5% rate until they are able to make the necessary system adjustments which should be completed no later than 15 May 2025. VAT transactions 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% rate to customers and from suppliers must equally be reported in fields 12 and 18. The VAT return declarations will be taken into consideration when verifications and/or audits on the affected VAT tax periods are conducted. The VAT returns submitted must continue to calculate the VAT auto calculation using the 15% rate from tax periods or months commencing 1 May 2025. Vendors who have already implemented both the rate changes and the zero-rating are encouraged to reverse those changes before 1 May. ALSO READ: A R1 billion U-turn: Scrapping the VAT increase leaves no winners, just absolute chaos Complexity and confusion around VAT increase Kieswetter says he understands the complexity and confusion that resulted from this process. 'Sars will do its best to provide further clarity to create certainty of obligation for all vendors.'
IOL News
25-04-2025
- Business
- IOL News
SARS Confirms: VAT hike is dead - but the fallout is just beginning
The South African Revenue Service (SARS) has confirmed that the planned 0.5% increase in the Value Added Tax (VAT) rate, initially scheduled for May 1, 2025, will not proceed. This decision follows a recent announcement by Finance Minister Enoch Godongwana, who decided to reverse the increase in light of ongoing parliamentary deliberations and public feedback. On Friday, SARS Commissioner Edward Kieswetter emphasised that the tax authority is committed to ensuring a smooth transition and compliance with the new direction. "While many vendors and consumers have invested time and resources preparing for the increase, we acknowledge the importance of stability and clarity in the tax environment," Kieswetter stated. "The reversal is detailed in the government's notice published on April 24, 2025, which also introduces the Rates and Monetary Amounts and the Amendment of Revenue Laws Bill in Parliament. Kieswetter said the bill is expected to be passed soon, adding that the new measures, which include specific guidelines for VAT vendors, will take effect on May 1, 2025.
IOL News
24-04-2025
- Business
- IOL News
DA continues court challenge against VAT increase despite settlement offer
The Democratic Alliance will continue with its application to have the power given to Finance Minister Enoch Godongwana to decide on VAT without ratification of Parliament declared unconstitutional. Image: Armand Hough / Independent Newspapers DA Federal Council chairperson, Helen Zille, said on Thursday her party will proceed with its legal challenge regarding the constitutional validity of Finance Minister Enoch Godongwana's powers to raise VAT despite the latter's out of court settlement offer. Speaking to the media in the morning, Zille said the Part B application would move forward, regardless of any out-of-court settlement discussion with Godongwana. She said the power to raise tax was conferred to the Parliament, not the minister. 'Only Parliament can raise taxes. It is a power that can't be delegated to a minister. We will continue with Part B of our application,' she said. Zille also said the DA has yet to receive formal settlement out of court settlement offer from Godongwana. 'The minute we see it, we will know what he is asking for and what we will not do is not to withdraw Part B of our application. It is important get to the order of the court that only Parliament can raise taxes,' she told the journalists. Godongwana announced his decision to introduce the Rates and Monetary Amounts and the Amendment of Revenue Laws Bill, which proposes to maintain the Value-Added rate at 15 per cent from 1 May 2025, instead of the proposed increase to VAT announcement in the Budget in March, two days after the court heard an application by the DA and EFF. Godongwana said the decision to forego the increase followed extensive consultations with political parties, and careful consideration of the recommendations of the parliamentary committees. 'By not increasing VAT, estimated revenue will fall short by around R75 billion over the medium term. As a result, the Minister of Finance has written to the Speaker of the National Assembly to indicate that he is withdrawing the Appropriation Bill and the Division of Revenue Bill, in order to propose expenditure adjustments to cover this shortfall in revenue.' National Treasury said Parliament will be requested to adjust expenditure in a manner that ensures that the loss of revenue does not harm South Africa's fiscal sustainability. 'The decision not to increase VAT means that the measures to cushion lower income households against the potential negative impact of the rate increase now need to be withdrawn and other expenditure decisions revisited. 'To offset the unavoidable expenditure adjustments, any additional revenue collected by SARS may be considered for this purpose going forward.' The National Treasury said it will consider the proposals put forward as potential amendments in upcoming budgets as mechanisms to increase the resources available. While the national Treasury's statement was mum on the proposed out of court settlement with the DA, Zille said it came as a surprise very late last night on Wednesday their lawyers informed her they had been approved for a settlement offer by Godongwana's lawyers. She said it was less than a week Godongwana stated in the answering affidavit that the would increase the VAT on May 1. 'What happened between last Thursday and yesterday was DA challenge heard in court on Tuesday… I have no doubt his legal team went to him yesterday to say it looks inevitable the VAT increase could well be set aside by the court,' she said. Zille also said her party would check for necessary spending reviews. 'There is still quite a battle to run from this point onwards.' She said they expected Godongwana to make a formal out of court settlement offer and they will respond through their lawyers. Zille also noted that there was no precedence to their court case. 'We believe a court can set aside Parliament's acceptance of fiscal framework if it was unlawful and irrational,' she said, adding that they did not know which path was to be followed. "There were two main respondents in our case. Number one was the minister and obviously the National Treasury and two was Parliament,' she said. 'We have to seek a settlement agreement with both before we can say we have beaten this VAT increase. So it's important for us to say that while victory is a nose length away, we still have to cross the finishing line," Zille said. Asked about the DA's stay in the Government of National Unity, Zille said it was not her position to say under what circumstances the GNU should continue. 'I can't categorically answer now. A lot will depend on what happens today.' Zille also said the ANC, which held its press conference with smaller parties that voted for the fiscal framework, cancelled their meeting that was scheduled for 11am.
BBC News
24-04-2025
- Business
- BBC News
South Africa reverse controversial VAT increment - wat next?
South Africa don reverse dia controversial proposed value added tax increase just days bifor e suppose take effect. Dis VAT increase wey South Africa Finance Minister Enoch Godongwana announce for March 2025 during di budget speech cause serious political battle between parties for di coalition govment. Plenti South Africans no support di announcement of di VAT increase - dem tok say e go add to di hardship wey dem dey face. Di proposed VAT increase na to add 0.5 percent by 1 May 2025 den followed by anoda 0.5 percent increase by 1 April 2025. But now, di Finance Minister for South Africa don announce di cancellation of di proposed VAT, in a statement dated 24 April 2025. According to di finance minister, e say oda tax increases or public spending cuts fit follow. "Di Minister of Finance go shortly introduce di Rates and Monetary Amounts and di Amendment of Revenue Laws Bill (Rates Bill) wey dey propose to maintain di Value-Added Tax (VAT) rate at 15 per cent from 1 May 2025, instead of di proposed increase to VAT wey dey announced in di Budget for March," di statement tok. Di reversal of di VAT hike go likely welcome news for many South Africans, most of dem dey alreadi burdened by di rising cost of living. Finance Minister Godongwana bin dey advocate for di VAT increase from 15 to 15.5 percent, wey e argue say e go help di most vulnerable citizens from di effects of oda tax measures. Di Finance ministry warn say di effect of dis new move fit mean a revenue shortfall of about R75 billion (roughly $400 million) ova di medium term. How di VAT increase take come On Wednesday 12 March 2025, Minister Godongwana deliver di 2025 Budget Speech for di National Assembly temporary Chamber in di presence of di parliament members wey dey made up of opposition parties as well as President Cyril Ramaphosa wia e announce increase in VAT, infrastructure spending among oda economic issues. Godongwana bin outline all di financial, economic and social commitments wey di govment want for im expenditure as well as govment spending and proposals for revenue collection wey govment wan use fund di economy. Bifor today speech presentation, dem bin don postpone di presentation two weeks bifor, sake of complain ova di proposed VAT increment. According to di budget speech presentation by di finance minister, govment go increase VAT by half-a-percentage point for di first year and anoda increase go happen for di following year. Di VAT go increase by 0.5% from 1 May 2025 den followed by anoda 0.5% on 1 April 2026. "To raise di revenue needed, di govment don propose to increase di VAT rate by half- a- percentage point for 2025/2026, and by anoda half-a-percentage point for di following year. "Dis go bring di VAT rate to 16 per cent for 2026/27." Wen di finance minister announce dis, noise bin start for di parliament as some members disagree and di minister get to explain imsef more. Na di speaker later try calm di situation bifor dem allow am to continue to read im speech. According to Minister Godongwana, e say to borrow or additional debts no go dey affordable for di South Africa economy and na VAT wey affect everybody, na im be di effective way to fit fund di spendings of di govment. Why di VAT reversal According to di statement from di Finance Ministry in South Africa, di decision to reverse di VAT increase na afta consultations wit political parties and parliamentary committees. Di statement add say, di Minister of Finance don write to di Speaker of South Africa National Assembly say e wan withdraw di Appropriation Bill and the Division of Revenue Bill. "Di decision to let dis increase go follow extensive consultations wit political parties, and careful consideration of di recommendations of di parliamentary committees. "By not increasing VAT, estimated revenue go fall short by around R75 billion ova di medium-term. Di ministry add say di Parliament go gatz adjust expenditure so dat revenue losses no go harm South Africa economy. Sake of di VAT reversal, di ministry say expenditure adjustments fit lead to additional revenue and di Minister of Finance go introduce a revised version of di Appropriation Bill and Division of Revenue Bill within di next few weeks. "Di decision not to increase VAT means say di measures to help lower income households against di potential negative impact of di rate increase now need to dey withdrawn and oda expenditure decisions go dey revisited." Dem say di VAT reversal go affect oda revenue but dem go find ways to replace di VAT increase and dem go do oda proposals as potential amendments for upcoming budgets. How parties dey react? Di Economic Freedom Fighters (EFF) wey be one of di political parties for South Africa wey dey against di VAT increase say dem welcome di decision to reverse di VAT rate. Howeva, di party say make di Finance Minister resign sake of how di budget don threaten di economic stability for di kontri. "Di EFF call for di immediate resignation of di Minister of Finance and di Director General of di National Treasury." Dis entire budget drama na reflection for di Minister of Finance and im Director General say dem dey out of depth and pose a threat to di economic stability of di kontri and by consequence, na threat to di livelihoods of South Africans," EFF tok for dia statement. Di Congress of di People (COPE) party also say di reversal of 'ill-conceived VAT increase' dey welcomed. Dem add say dis reversal "expose either gross incompetence or a deliberate abuse of power by di Minister of Finance." Also, ActionSA party say di VAT reversal na 'victory' for South Africa dem go make sure say no unnecessary tax hike take place for di kontri. "We say NO VAT increase go dey, and we deliva on our promise. As ActionSA, we go kontinue to dey fight to ensure say South Africans dey protected from unnecessary tax hikes".
