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.
Practical Implications for VAT Vendors
Vendors who have not yet implemented the VAT rate increase are advised to halt any further development or system changes related to the 0.5% increase.
SARS said that VAT should continue to be charged at the standard rate of 15% rather than the previously planned 15.5%.
He mentioned that ‘the instructions are clear’ for vendors facing technical challenges in reverting to the 15% rate.
“They may temporarily report and account for supplies and purchases at the 15.5% rate until they can make the necessary adjustments, which should be completed by May 15, 2025.”
Reporting and Adjustments
According to SARS, all VAT transactions billed at the 15.5% rate must be accurately reported in the appropriate fields of the VAT return—specifically, field 12 for output tax and field 18 for input tax.
SARS added that Vendors must also account for any refunds related to these fields’ 0.5% rate difference, furthermore, the state revenue collector stated that the VAT return system will continue operating at the 15% rate starting May 1, 2025.
The institution said the auto-calculation ensures consistency across filings and supports compliance.
“Vendors who had already implemented the rate increase or zero-rating adjustments are encouraged to reverse these changes before May 1, 2025, to align with the new policy.”
Kieswetter acknowledged the complexities and potential confusion caused by the change in plans.
“SARS will do its best to provide further clarity and guidance to create certainty of obligation for all vendors,” he assured.
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