Making VAT a little more simple
VALUE-ADDED TAX (VAT) CAN GET QUITE TECHNICAL SO WE AT DOUGHGETTERS ACCOUNTING HAVE PUT TOGETHER A SUMMARY OF THE MOST IMPORTANT CONSIDERATIONS
The standard rate of VAT will change from 14% to 15% with effect from 1 April 2018. There for from 1 April 2018, all taxable goods or services supplied by vendors, goods imported, as well as certain services supplied by non-residents to residents for non-taxable or private use (imported services), are subject to the VAT rate of 15%. Vendors must ensure that all price tickets, labels, quotations, advertisements, etc., reflect the new VAT rate of 15% from 1 April 2018.
RATE SPECIFIC RULES
Goods delivered, or services rendered before 1 April 2018 – VAT at the rate of 14% applies.
Goods delivered, or services rendered starting before and ending on or after 1 April 2018 – The VAT- exclusive price of the supply must be apportioned on a fair and reasonable basis and allocated to the respective periods. There for the rate of 14% is applied to the value of supplies before 1 April 2018 and the rate of 15% is applied to the value of supplies from 1 April 2018 onwards.
Goods delivered, or services rendered after 1 April 2018 – VAT at the rate of 15% applies.
This rate specific rule does not apply if the time of supply has been triggered by the issuing of an
invoice or payment being made.
DEBIT AND CREDIT NOTES
If a debit or credit note relates to supplies of goods or services rendered before 1 April 2018, subject
to certain exceptions (refer to the heading “Rate Specific Rules” in this pocket guide), the old VAT
rate of 14% should be used. Similarly, debit or credit notes relating to supplies made after 1 April
2018 must reflect the new rate of 15%.
Accounting systems should be set up to process transactions at the new VAT rate of 15% from 1
April 2018. In some instances, transactions processed after 1 April 2018 may be subject to the VAT
rate of 14%. Alert accounting resources to certain rules and exceptions and confirm that the
accounting system can accommodate the different rates.
The VAT percentage to apply will depend on the transaction date. The transaction date is the earlier of when an invoice is issued, or payment is received.
NOTICE OF PRICES QUOTED OR ADVERTISED
As a practical arrangement, SARS has granted permission for a vendor to display a notice that the price does not include VAT at the new rate of 15% and prices will be adjusted at the point of payment. The notice must be prominently displayed at all entrances to the business premises and at all points where payments are affected. The notice should be removed by no later than the end of
Vendors under Category B (March/April), Category E (annual return) and most farmers registered
under Category D VAT reporting periods, will have transactions subject to the VAT rate of 14% and
15% which must be correctly reflected on the VAT201 return. The VAT201 return will be updated to
reflect the new VAT rate of 15% in time for VAT reporting periods ending in or after April 2018.