Christo Theron, director at BDO SA, looks at various VAT facts and statistics. VAT currently contributes an estimated 33% of the national budget. The average VAT rate globally is around 20%.
In many member countries of the European Union the contribution of VAT currently exceeds 50% of the national tax base
VAT rates are increasing globally with the average currently hovering at around 20%
In South Africa VAT currently contributes approximately 33% to thenational budget at a VAT rate of 14%
South Africa is well behind the global average and a VAT rate increase of anything up to 6% can be defended on the basis of global alignment
The South African Revenue Services (SARS) acknowledge the important role that VAT will play in the future South Africa and have invested heavily in human and technology based infrastructure to ensure that the tax base is not eroded by abuse or non-compliance
The assumption that VAT registered businesses can treat all VAT charged to them by suppliers of goods or services as recoverable input tax is underthreat. Case law has shown that anything supplied to a third person out of a motive of pure gratuitousness cannot be held to be the making of a taxable supply for a consideration. Such supplies therefore do not form part of a vendor's enterprise activities, hence no input tax credits on the acquisition of such goods or services is available to the vendor.
VAT incurred on expenses to manage any activity relating to the shareholder function within an organisation does not qualify as recoverableinput tax. This has a direct impact on the recoverability of VAT on a wide range of corporate expenses, for example share register costs, merger and acquisition expenses (both defensive and offensive), transfer secretary costs, etc
Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.