Expert panel to consider extending VAT-free list

By Pieter van der Merwe for Jacaranda FM

Currently, South Africa has 19 items that are exempt from value-added tax (VAT).

An expert panel is expected to review the existing list of zero-rate items and consider possibly extending the list of items exempt from VAT.

The Minister of Finance has asked that the panel be appointed to probe the impact of the recently announced increase in VAT on the poor.

The tax will go up from 14 to 15% at the beginning of April – the increase in democratic South Africa.

“The review will consider expanding the list of basic food items that are VAT zero-rated, and also consider how specific expenditure programmes can be improved to better target poor and low-income households,” reads a statement by Treasury.

The panel will also accept imput from the public in and various social stakeholders during the process.

The panel, which will be led by Professor Ingrid Woolard, is set to submit its first report by the end of June.

The South African Revenue Service (SARS) meanwhile says it is ready to implement in the one percentage point increase come the first of April.

“SARS teams have been working on changes to the systems which are used to receive VAT declarations made by vendors and calculate any VAT refunds or VAT due to SARS,” reads a statement.

SARS adds changes have also been made to the VAT201 forms.

While the Revenue Service says it does not expect many challenges, it has given large vendors a four month grace period to reflect the change in prices.

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