Commissioner Edward Kieswetter on practical implication on finance Minister’s decision to reverse VAT

The Commissioner for the South African Revenue Service (SARS), Mr. Edward Kieswetter has noted the Finance Minister, Mr. Enoch Godongwana’s decision to reverse the planned 0.5% VAT rate increase, which was initially set to take effect on 1 May 2025. This decision has significant practical implications for VAT vendors and consumers. As the administrator of all national government tax measures, SARS will ensure that the necessary adjustments are made to accommodate this change. 

Additionally, the Commissioner acknowledges that vendors and consumers have invested in preparing for an increase in VAT during a period of uncertainty from Parliament’s deliberations and public comments. 

As per the Minister’s media statement announcing the reversal of the increase in the VAT rate announcement and the publishing of Government Notice No 6157 of 24 April 2025, introducing in Parliament the Rates and Monetary Amounts and the Amendment of Revenue Laws Bill, which is anticipated to  be  passed by Parliament,  the following measures will apply to all VAT vendors with effect from 1 May 2025:

VAT vendors who have not implemented the change in rate, they stop all development in this regard.

Vendors are expected to charge VAT at the rate of 15% and not 15.5% for the relevant goods and services as per the VAT Act.

Vendors may use limited time to adjust their systems accordingly. and report and pay the VAT.

Should a vendor not be able to revert to the 15% rate, due to complex system changes that may be needed, 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 15 May 2025.

VAT transactions which were charged at 15.5% must be reported in filed 12 (for output tax) and field 18 (for input tax) of the VAT return.

Adjustments in the form of refunds of the 0.5% rate to customers and from suppliers must equally be reported in fields 12 and 18 respectively.

The VAT return declarations made will be taken into consideration when verifications and/or audits on the affected VAT tax periods are conducted.

The VAT returns that are to be submitted will continue to calculate the VAT auto calculation using the 15% rate from tax periods or months commencing 1 May 2025.

Vendors who have already implemented both the rate changes and the Zero-Rating are encouraged to reverse those changes before 1 May 2025.

Commissioner Edward Kieswetter said that “he understands the complexity and the confusion that has resulted from this process. SARS will do its best to provide further clarity to create certainty of obligation for all vendors.”