Sars offers more time for VAT hike reversals

Sars offers more time for VAT hike reversals By KHULEKANI MAGUBANE The South African Revenue Service Sars has given businesses and service providers that cannot immediately reverse the 15.5% VAT charge an opportunity to do so by May 15. This comes as thousands of companies and suppliers that have already incorporated the 0.5 percentage point increase scramble to reverse it. Businesses including banks, cellphone companies, insurance firms and other service providers have already sent notices to thousands of customers informing them of the higher VAT charge kicking in on May 1. However, with finance minister Enoch Godongwana reversing the increase as a result of political pressure, these businesses are now under pressure to readjust their billing systems back to 15% VAT. On Friday, Sars commissioner Edward Kieswetter noted that the decision to reverse the hike had "significant practical implications for VAT vendors and consumers". He advised businesses and service providers that had already incorporated the 15.5% rate to use the limited time between now and May 1 to readjust their systems and to report their progress to the revenue service. Companies that cannot do this immediately have a threeweek window to reset their systems to 15% VAT. "Should a vendor not be able to revert to the 15% rate, such supplies and purchases must be reported and accounted for at the 15.5% rate until such time that you are able to make the necessary system adjustments, which should be completed by no later than May 15," Kieswetter said in a statement. Returns Businesses that cannot immediately revert to 15% must report refunds to customers to Sars when they file their VAT returns. "The VAT return declarations made will then be taken into consideration when verifications and or audits on affected VAT tax Sars Commissioner Edward Kieswetter. Picture: Ruyan Boshoff ww Should a vendor not be able to revert to the 15% rate, such supplies and purchases must be reported Edward Kieswetter periods are conducted. Sars will do its best to provide further clarity for vendors," Kieswetter said. Businesses approached by Business Times were confident they would be able to reset their systems or reimburse customers if they couldn't do so on time. Sizwekazi Mdingi, FNB's head of communications, said the bank would comply with all the necessary legal and regulatory structures that govern all industries. "Where these changes are not possible through automated processes and fees have been incurred, the bank will fully refund affected customers. The bank will be communicating with all customers in this regard," Mdingi said. A spokesperson for Nedbank said: "We art implementing the VAT change rollback on our systems ... and any discrepancies will be rectified accordingly" Standard Bank spokesperson Ross Linstrom said the group would continue applying the 15% VAT rate. Absa said that in cases where systems were not adjusted back in time, affected customers would be reimbursed. PayTV operator MultiChoice said DStv would no longer be implementing the increase. Insurance company Outsurance said: "We have already communicated to our clients that their premium remains unaffected." Derek Wilcocks, chief information officer at Discovery Group, said while the sudden reversal had had a minor effect on the insurance giant's internal processes, it had been able to update its systems and retain the VAT rate of 15%. Retailer Pick n Pay said it would ensure Turn to page: 4 Finance minister Enoch Godongwana Sars offers more time for VAT hike reversals Continued from page: 1 all products were taxed at 15% as "per guidance from the Treasury". Gerhard Ackermann, national merchandise executive at the Spar Group, said the retailer was continuing with its pricing structures as per the existing regulations. Consumer Goods Council of South Africa CEO Zinhle Tyikwe said compliance readiness came at a huge cost to businesses that had been working to apply the VAT increase. Court case South African Institute of Taxation tax specialist Keitumetse Sesana said the VAT increase reversal was good news for businesses, as many were considering absorbing the increase to cushion consumers. But she warned that there needed to be certainty about the court case brought by the DA and EFF challenging the original VAT increase which was still continuing. Finance minister Enoch Godongwana has tabled the Rates and Monetary Amounts and Amendment of Revenue Laws Bill, which legislates tax rates and is the first step towards reversing his earlier decision. He has also withdrawn the Appropriations Bill and the Division of Revenue Bill, but has yet to present a new fiscal framework and retable both these measures. Nontobeko Mbava, chair of the Financial and Fiscal Commission the statutory body advising the government on fiscal matters told Business Times the minister would have to go back to parliament with a new report to change the fiscal framework. "The National Assembly must sit again, receive the report, and adopt it through a vote. So it will be another process," she said. By Friday, it was unclear when the Treasury would submit the amended fiscal framework to parliament, or whether its two finance committees were planning an emergency meeting to debate and adopt it.