VAT is now levied at the standard rate of 15% on the supply of goods and services by registered vendors, when you buy electricity or anything other equipment you pay 15% over to government or the agents. When they broke into your property, stole it you have to reclaim it and repay again 15% VAT .

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14 > 15 > PARLIAMENT

Parliament, Tuesday, 13 November 2018 – After considerable consultation and deliberation, including three sets of public hearings, the Standing Committee on Finance has reluctantly accepted the 1% value-added tax (VAT) increase.

At the public hearings there was almost unanimous opposition to the increase from civil society. The committee has from the outset expressed serious reservations with the increase, among other reasons, for the negative impact on the poor and lower-income earners, who are already dealing with increases in fuel prices and the cost of living generally.

However, the committee is also acutely aware of the severe constraints on the budget and the desperate need to raise additional revenue. “The pressures have become more glaring following the introduction of the Medium Term Budget Policy Statement (MTBPS), which estimated 0,7% economic growth. The MTBPS also unexpectedly forecast that there will be a R27.4 billion shortfall of revenue this financial year, which includes R20 billion of VAT returns that have been withheld,” said Mr Yunus Carrim, Chairperson of the committee.

The committee welcomes the zero-rating of white bread flour, cake flour and sanitary pads, as well as the decision to provide free sanitary pads to learners. However, it believes that there can be more targeted expenditure to cushion the effects of VAT on the poor, by reprioritising within the expenditure ceiling. National Treasury needs to effectively consider the possibilities of increasing the allocation of free water and electricity to indigent households and vouchers for uniforms for learners at no-fee schools for locally produced school uniforms.

“More than ever, parliament and government have to ensure that more revenue is secured through considerably strengthening capacity at the South African Revenue Services to raise more revenue, drastically reducing wasteful expenditure and more effectively tackling the illicit economy and corruption. More revenue will also flow from investment, economic growth and job-creation,” said Mr Carrim.

The committee believes that the increase has to be reluctantly accepted, but should be reviewed at the end of the third year of its implementation, 1 April 2021, following an evaluation of the impact of the rate on revenue collection and the poor.

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WHAT ARE IMPLICATIONS ON “CRIME – AN OPINION

Why would any government fight and prevent crime income if their shares are 15% – when somebody have a burglary and insurance claims occur, VAT is involved, especially from one domain, business or vehicle. You pay 15% VAT on all new goods and equipment. If and when Eskom applies load shedding, most electrical equipment are sensitive too, it is easier to break and replace and VAT again. In the end, it is the end consumer who pays. A break-in at any kind of property have to claim and pay extra on insurances. Insurance is high and sometimes the middleman simply can’t afford it. Perishable foods are another examples that goes wrong when power cuts occur and many of these products are taxable. Hi-jackings are expensive – motor vehicles and trucks are involved, not only on roads, but also farms. Products and equipment on burning trucks are expensive to replace with 15% VAT. The burning down of businesses, trucks and houses do have claims and again, VAT is involved to replace. When it is government, provincial or municipal buildings VAT is also involved with replacing and the “tender processes”. Same when people came and visit South Africa to claim.

Hoekom sal enige regering misdaad inkomste bekamp en verhoed as hulle hap so groot is uit VAT – wanneer daar 2-4 keer inbrake en versekeringseise plaasvind, is VAT betrokke, veral vanuit een domein. Wanneer ‘n persoon enige elektriese toerusting nuut aanskaf, word daar in Suid-Afrika 15% verhaal vanuit die VAT kissie. As en wanneer Eskom elektrisiteit beurtkrag toepas, raak dit alle sodanige toerusting wat makliker breek en vervang moet word en is VAT weer ter sprake. Aan die einde is dit die eindverbruiker wat betaal. Die slagoffers waar ingebreek word moet die eise hanteer en ekstras inbetaal. Versekerings is hoog en soms kan die middelman dit eenvoudig nie meer bekostig nie. Bederfbare voedsel is nog ‘n voorbeeld wat tot niet gaan as daar kragonderbrekings plaasvind en heelwat hiervan is belasbaar. Kapings en motors wat gesteel word is ‘n baie duur artikel met VAT implikasie of vervanging. Wanneer geboue afbrand of leeg geplunder word, het dit ‘n effek op die eindverbruiker en entrepreneur wat moontlik deure moet sluit omdat dit eenvoudig nie meer bekostig kan word nie. Wanneer staatsgeboue of vandalisme plaasvind word daar weer tenders gevra en hier is weer ekstra inkomste ter sprake. Trokke en al die inhoud, wat verskeie besighede raak en afgebrand word, het ‘n invloed op die verkoper, die middelman, die vervoer asook die eindverbruiker. Produkte se pryse verhoog en so word meer VAT betaal. Dit kring verder – toeriste wat die land besoek en waar gesteel en aangerand word.

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VAT – is an indirect tax that works through the price system, puts a larger burden of the tax on low-income households.

A value added tax (VAT) was introduced in South Africa in 1991 to replace the general sales tax (GST). Initially, there were some questions on the ability of VAT to replace GST as a revenue source for government. However, the overall performance of VAT, as revenue generator seems satisfactory; in 2002 the government stated VAT is a dependable and broad-based revenue source.

The VAT in South Africa is administered with a rebate for intermediate input use. Retail sellers pay the statutory rate times the value of output minus the VAT payments paid by the intermediate inputs used in production.

If one compares VAT to all the major taxes levied in South Africa, one can see that VAT is the second most important revenue source for government after income taxes. VAT’s importance also remained relatively constant over the years. In 2002 VAT contributed 25 percent to total tax revenue (SARB,2002:S-54 and S-55).

A tax is regressive when lower income groups spend a larger proportion of their income on the tax, than higher income groups. Indirect taxes, including VAT are generally seen as regressive: a single positive rate of VAT applied to the broadest possible base is essentially a proportional tax on consumption and is therefore regressive in nature.

A regressive tax is a tax that takes a greater percentage of income from those who earn less, than from those with a higher income. … Examples of regressive taxes include sales taxes and property taxes, which are set at a flat percentage, regardless of who the purchaser or owner is.

The progressiveness of the complete tax system should be taken into account and not only the regressiveness of VAT. The progressiveness of the taxes takes direct taxes paid by households as well as VAT into account. One must not focus on the distributional impact of VAT in isolation: what affects poverty and fairness it the impact of the tax system as a whole

At inception various basic food items such as brown bread, maize meal, samp, mealie rice, dried mealies, dried beans, lentils, pilchards, milk powder, milk, rice, unprocessed vegetables and fruit, vegetable oil, and eggs were exempted from VAT (SA Tax, 2001:Schedule 2 Part B).

Click to access 1816.pdf

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TODAY IN 2019

What types of tax are government institutions registered for?

Government Institutions exist at a National, Provincial and Local Sphere of Government. There are Government Departments as listed in the Public Service Act; State Owned Entities, Public Entities as listed in the PFMA, Municipalities, Municipal Entities, Pension Funds, Further education and training colleges (FET’s), Sector Education and Training Authorities (SETAs), Public Universities, Public Schools, Public Hospitals etc.

Government Departments are registered for Pay-As-You-Earn (PAYE) only
Municipalities are registered for Value Added Tax (VAT) and PAYE
Public Entities may be registered for all tax types
Provincial and National Government Departments are exempt from the registration and payment of Unemployment Insurance Fund (UIF), and may register for Skills Development Levy (SDL)
Some government institutions are exempt from the payment of Income Tax as they are non-profit institutions.

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Whether the sale of pharmacy drugs/medicine to in-patients is not covered by the exemption from VAT under Section 109 (G) of the NIRC of 1997, as amended. 3 : “Pursuant to the above Supreme Court decision, taxpayers engaged in hospital services are exempt from VAT.

A vendor making taxable supplies of more than R1 million per annum must register for VAT. A vendor making taxable supplies of more than R50 000 but not more than R1 million per annum may apply for voluntary registration. Certain supplies are subject to a zero rate or are exempt from VAT.

Value-Added Tax is commonly known as VAT. VAT is an indirect tax on the consumption of goods and services in the economy. Revenue is raised for government by requiring certain businesses to register and to charge VAT on the taxable supplies of goods and services. These businesses become vendors that act as the agent for government in collecting the VAT.

VAT is charged at each stage of the production and distribution process and it is proportional to the price charged for the goods and services.

VAT increased from 14% to 15% from 1 April 2018. VAT is levied on the supply of most goods and services and on the importation of goods.

The VAT on the importation of goods is collected by customs. There is a limited range of goods and services which are subject to VAT at the zero rate or are exempt from VAT.

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One area of concern is the cost of private medical aid and VAT.

For years increasing healthcare inflation and economic pressures have been a challenge for the industry. “The reality is that when consumers are struggling, medical aid, which is essentially a grudge purchase, is often viewed as unaffordable,” says Gerhard van Emmenis, principal officer of Bonitas Medical Fund.

“In addition healthcare costs are not regulated which is why it is crucial for medical aid schemes to continue to explore ways to contain costs without compromising the level of health care offered to members.”

THE LAW

VAT is never the property of any private entity but belongs to the government. “We are therefore only vendors that collect the monies on their behalf. From April 1, we will increase the VAT to all providers of the scheme by 1%. However, although this will have a direct impact on the budget for 2018 it will be absorbed by operational surpluses and not passed on to members.’

https://www.bizcommunity.com/Article/196/320/174692.html

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TAX EXEMPTIONS

https://www.sars.gov.za/ClientSegments/Businesses/TEO/Pages/default.aspx

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2018 – VAT, went up by 1% to 15%. This increase was announced by previous minister of finance, Malusi Gigaba in his February Budget speech and came into effect as planned. The government agency responsible for collecting TAX is the South African Revenue Services, SARS and we’re joined by Narcizio Makwakwa, who is the acting executive responsible for tax relationship management.