Print Page
News & Press: VAT

VAT rate increase: What VAT rate should be charged?

26 February 2018   (0 Comments)
Posted by: Author: Gerhard Badenhorst
Share |

Author: Gerhard Badenhorst (CHD)

The Minister of Finance announced in his Budget Speech of 21 February 2018 that the standard rate of VAT will increase from the current 14% to 15% with effect from 1 April 2018.

Unfortunately, the effective date of 1 April 2018 for the rate change does not allow much time for vendors to amend their systems and to implement procedures to ensure that VAT is correctly accounted for from that date. There is also uncertainty as to when supplies still qualify for VAT at 14% and when VAT should be levied at 15%. The VAT Act contains certain specific rules with regard to a VAT rate change and the rate of VAT which should apply to goods or services supplied during the transitional period. These rules are as follows:

Entitlement to alter a contract price in relation to the VAT rate increase

Section 67 of the VAT Act deals with the situation where an agreement was entered into before 1 April 2018. It entitles the supplier to recover from the recipient, in addition to the amounts payable by the recipient to the vendor as stipulated in the agreement, the additional amount of VAT that becomes payable on supplies on or after 1 April 2018 as a result of the VAT rate increase, unless the agreement specifically stipulates otherwise. The supplier will nevertheless be required to pay VAT at 15% on such supplies, irrespective of whether or not the supplier actually recovers the additional consideration from the recipient.

Transitional rules

The transitional rules dealing with a VAT rate increase are contained in s67A, and are dealt with below:

Supplies before 1 April 2018

Where goods (excluding fixed property supplied by way of a sale) are provided before 1 April 2018, or where services are performed during a period commencing and ending before 1 April 2018, the rate of 14% will apply to these supplies, irrespective of the fact that an invoice for such supply may only be issued after 1 April 2018, and payment is received after that date.

Goods are deemed to be provided when they are delivered to the recipient. It is not clear what is meant by ‘delivery’, but it seems that the concept is wider than just physical delivery, and that it includes ‘delivery’ in the legal sense. If the goods are supplied under a rental agreement, such goods are deemed to be provided when the recipient takes possession or occupation thereof.

There is, however, no guidance as to when services are deemed to be performed. It seems that services must be carried out or physically performed for the services to be considered to have been performed.

Click here to read more.

This article first appeared on



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.

  • Tax Practitioner Registration Requirements & FAQ's
  • Rate Our Service

    Membership Management Software Powered by YourMembership  ::  Legal