Businesses are buzzing with expectations about how today's Budget Speech announcement will affect your bottom line. If your business is Vat-registered, you'll know it's the topic of Vat-exempt supplies that tends to cause the most confusion. And politicians are expecting that we'll see a rise in the amount of items that now fall under the Vat zero rate. Here's what you need to know...
Finance Minister Pravin Gordhan is facing lots of pressure from businesses ahead of today's Budget Speech unveiling.
If you run a Vat-registered business, there could be a number of changes that affect the way you do business.
For example, Cosatu's spokesman Patrick Craven has called for the zero-rating
of medicines, water, domestic electricity and public education, says IOL's Business Report
But you don't have to wait for the announcement to affect your business Vat dealings.
With amendments to the Taxation Laws Amendment Act
that affect Vat promulgated on 1 February 2013
, there's a chance you're already not charging Vat
You should already know the Vat standard rate of 14% applies to most supplies and importations.
But it's the topic of Vat exemption or zero-rating that causes the most confusion.
If your business creates Vat-exempt supplies, you can't claim input tax credits back from SARS
In terms of Vat
law, you can't claim Vat or input tax back from SARS
for any expenses related to the making of exempt supplies, says the Tax Bulletin
And there's more.
Don't charge the Vat standard rate of 14% on these items!
SARS's January issue of Vat Connect added a Vat exemption for imported goods that will be consumed or used at an international sporting event, like the recent African Cup of Nations (AFCON 2013) and the coming African Nations Cup (CHAN 2014).
This includes 'special foodstuffs and non-alcoholic beverages for consumption by the teams; and low value promotional materials which are not for sale to the public.'
So if you're making any of these items, you should be charging Vat at the zero rate instead of the Vat standard rate of 14%.
Watch for any other new additions to the class of 'Vat-exempt' supplies in today's Budget Speech announcement!
If you need more information on Vat exempt supplies, get your hands on the Practical Vat Loose Leaf. In the Practical Vat Loose Leaf we've got a dedicated chapter on Vat exempt supplies. In it you'll discover:
Three things to remember about exempt supplies
Definition: Exempt supply
Ten exempt supplies
What happens to a deposit on an exempt supply that's forfeited?
What to do if your business makes exempt as well as taxable supplies
Mixed supplies and how to apportion them
What happens when you import exempt goods?
Take advantage of these six tips
and much more!
Get your Practical Vat Loose Leaf here