How to deal with the new VAT rate
The VAT rate have increased in South Africa from 14% to 15% starting from the 1st of April 2018.
If you are using Pastel as an accounting software, please contact us and we can assist you in setting up the new tax type. This will not be done automatically.
Xero and Sage Online has issued statements saying that these online accounting packages will update automatically. If you have any queries also don’t hesitate to contact us.
What to do before the increase happens:
- Make sure all quotes sent to clients are at a rate of 15%
- Make sure your invoices show the increased rate of 15%
- Perhaps send a notification email to your current clients stating that prices will go up with the VAT rate increase
- Make sure on the 1st of April 2018 that all invoices sent to client show the 15% VAT rate and calculated correctly
- Also make sure that VAT claimed is at 15%
In an analysis of the changes, Kwaku Koranteng acting head of Absa Asset Consulting said that the increase to the VAT rate was somewhat surprising.
“While there have been talks of VAT increases prior to the Budget speech as presented by the Finance Minister today, the across the board rise to 15 percent on all goods and services is somewhat of a surprise, but arguably the most effective way of raising revenue,” Koranteng said.
“It does mean however that general inflation will increase and the average consumers’ pockets will be hit the hardest.
“The VAT increase has an unpopular social element given that it has a bigger impact on the lower to middle income market, while at the same time our VAT rate is below the global average, therefore the increase is somewhat justifiable in addressing the fiscal gap,” he said.
If you need any guidance or assistance please don’t hesitate to contact us on email@example.com or 011 6581324