Here's what SARS had to say about the VAT hike reversal
The South African Revenue Service (SARS) has confirmed that it will implement Finance Minister Enoch Godongwana's decision to reverse the planned 0.5% increase in Value-Added Tax (VAT), which was initially set to come into effect on 1 May 2025.
SARS Commissioner Edward Kieswetter acknowledged the Finance Minister's announcement, noting the 'significant practical implications' for both VAT vendors and consumers.
In a statement, Kieswetter stressed that SARS, as the administrator of national tax measures, would ensure the necessary adjustments are made promptly.
The reversal follows the Minister's media statement and the publishing of Government Notice No. 6157 of 24 April 2025, alongside the Rates and Monetary Amounts and the Amendment of Revenue Laws Bill, which Parliament is expected to pass shortly. Vendors who have not yet implemented the 15.5% VAT rate should immediately stop any system changes.
any system changes. All vendors must charge VAT at 15% for goods and services in line with the VAT Act from May 1, 2025.
for goods and services in line with the VAT Act from May 1, 2025. Vendors unable to adjust their systems immediately may continue charging 15.5% until no later than May 15, 2025 but must report these correctly on VAT returns.
but must report these correctly on VAT returns. VAT charged at 15.5% must be reported in Field 12 (output tax) and Field 18 (input tax) of the VAT return.
and of the VAT return. Refunds or adjustments related to the 0.5% overcharge must also be reflected in Fields 12 and 18.
The VAT return system will auto-calculate VAT at 15% for all tax periods starting on or after May 1, 2025.
for all tax periods starting on or after May 1, 2025. Vendors who have already fully implemented both the 15.5% rate and any associated zero-rating are encouraged to reverse these changes before May 1.
Kieswetter acknowledged the confusion the reversal has caused, stating: 'We understand the complexity and confusion that has resulted from this process. SARS will do its best to provide further clarity to create certainty of obligation for all vendors.'
The VAT rate adjustment process comes after a period of public uncertainty and Parliamentary debate. SARS has promised to support vendors through the transition with further guidance as necessary.
Vendors and taxpayers are urged to stay updated via official SARS communications as the May 1 deadline approaches.
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