Important news for our valued South African clients:
1. VAT goes up from 1st April
As a registered Value Added Tax (VAT) vendor, Kri8it is obligated by law to raise the effective VAT rate that is levied on all our services from 14% to 15% as of the 1st of April 2018.
The new increased rate will be reflected on all tax invoices that we issue to you in relation to taxable services that are invoiced on or after the 1st of April 2018. See SARS guidelines.
2. Remember to adjust your tax settings if you sell goods and services online
If you are currently selling goods and services via an e-commerce platform, the VAT hike is likely to apply to you, too. Please remember to update your VAT details accordingly.
It’s important to understand that the payment gateways you use will not make the tax rate adjustment for you, as they merely process the tax value amount that you have determined yourself. You will therefore need to adjust your tax settings accordingly.
Please make sure you are charging the 15% VAT rate on all your taxable goods and services sold from the 1st of April 2018 onwards. It may be a good idea to consult with your tax professional or an accountant to be sure you’re up to date on all VAT rules that apply to your business and the solutions you offer.
About the VAT hike
Announced on the 21st of February 2018 by Finance minister Malusi Gigaba, this is the first time South Africa has increased VAT in 25 years. Unfortunately, it has now been deemed necessary by government as the state looks to add around R22,9 billion to its tax revenue.
According to Gigaba, the government considered potential adjustments to personal and corporate income tax, before deciding to focus on VAT.
“We have increased personal income tax significantly in recent years, particularly at the higher income bands, and our corporate tax is high by international standards. We have not adjusted VAT since 1993, and it is low compared to some of our peers. We therefore decided that increasing VAT was unavoidable if we are to maintain the integrity of our public finances,” Gigaba explained
The VAT increase, which came as a surprise to many analysts, will have an impact across the board on all goods and services, which is going to drive general inflation up – and hit consumers’ spending power.
Are any goods and services VAT-exempt?
There is a limited range of goods and services which are subject to VAT at the zero rate or are exempt from VAT. For example, zero-rated items include maize meal, brown bread, dried beans and rice. The goal here is to limit the impact of the VAT increase on vulnerable households.
All services provided by Kri8it are subject to VAT.
Please feel free to contact us if you’d like to chat about this issue further or find out more details.