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Involved in farming? Here's what you need to know about the new Vat proposal

by , 30 July 2014
Government is shaking things up everywhere.

It's not just amending labour laws, but it's also looking at modifying Vat law when it comes to farming activities.

If you're involved in farming, continue reading to find out about proposals by the Treasury to do away with zero-rating on goods and services.

The new Vat proposal regarding farming is as follows
 

BDlive reports that the Treasury wants to scrap the value added tax (Vat) concession of a zero-rating on goods and services bought by farmers for production purposes.

As you know, the sale of many farming supplies is zero-rated.

This includes:
 

  • Mealies
  • Vegetables
  • Herbs
  • Fruit
  • Milk
  • Eggs; and
  • Goods exported by direct export.


And in terms of Vat law, you can claim input tax on all the expenses you use in the course of your farming activities. But, if Treasury has its way, this could change. You may no longer be able to claim back the Vat input tax payments.

And this will affect your bottom line.

According to the report, 'the farming sector spends R100 billion a year on goods such as fodder, stock and fertiliser. If the Vat concession is scrapped, input costs will grow R14 billion a year.'

Why is the Treasury proposing these Vat changes?

 

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Here's the reason the Treasury is proposing Vat changes when it comes to farming activities
 

The Treasury said in a memorandum, published with the draft Taxation Laws Amendment Bill, there was 'strong evidence' that the concession was open to abuse, BDlive reports.

The Treasury believes the fiscus has lost more than R200 billion a year to fraudulent Vat claims.

The good news, according to the report, is that, 'agricultural bodies will meet SARS soon to thrash out possible solutions to corruption and fraud, without scrapping the Vat concession. Stakeholders have until August 17 to comment on the proposals in the bill.'

We'll keep you updated on this issue so you'll be aware of any changes and comply.

 

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