Latest news with #Value-AddedTax
IOL News
10-06-2025
- Business
- IOL News
Sugar drinks industry concerned by audits as SARS tightens compliance among producers
Shepstone &Wylie Attorneys in a statement by Erasmus Theron and Herman de Jong revealed that despite there being no increase in Sugar Tax there has been an increased focus by SARS on manufacturers' compliance within the sugary beverages industry Image: Karen Sandison Independent Newspapers The sugary beverages industry in South Africa is bracing itself for potential impacts as the South African Revenue Service (SARS) intensifies its focus on compliance among manufacturers. SARS is now targeting businesses involved in the manufacturing of sugary beverages, with the revenue collector saying manufacturers of sugary beverages must be registered as commercial manufacturers if they use more than 500kg of sugar in their manufacturing process. Professionals from Shepstone & Wylie Attorneys, Erasmus Theron and Herman de Jong, on Tuesday said the government was facing a daunting tax deficit following the vacuum left by an unchanged sugar tax amidst rampant fiscal constraints. They said that with an ambitious revenue target of R2.006 trillion set for the 2025/2026 tax period, the government has turned towards indirect taxes—specifically excise duties, fuel levies, and carbon taxes—as keystones to bridge the financial gap caused by failed proposals to increase the Value-Added Tax (VAT) rate. "Although the failure to increase sugar tax for the third consecutive year could be viewed as indicative of the fact that the importance of sugar tax is being diluted from a fiscal and health policy perspective, current experience, to the contrary, tends to indicate an increased focus by SARS on manufacturers' compliance within the sugary beverages industry," they said. The South African sugary beverages market for 2025 is estimated at R57 billion, which is a major contributor to the country's gross domestic product (GDP) through direct manufacturing, job creation, and distribution activities within the formal and informal sectors. In the 2024 tax year, the HPL contributed over R2.306 billion to the fiscus, which is less than the initial R2.446bn collected at the inception of the Health Pomotion Levy regime during the 2019/2020 tax period. "Although the reduced contribution to the fiscus could be attributed to reformulation strategies by manufacturers and lobbying activities by the sugar industry, it is also important to note that since the inception of the HPL regime, SARS' focus on compliance within the sugary beverages industry has been limited when compared to other industries such as the alcohol, tobacco, and petroleum industries," Shepstone & Wylie Attorneys said. However, Shepstone & Wylie Attorneys said this appears to be changing. The attorneys said there has been a noticeable increase in SARS queries and audits at sugary beverage manufacturers over the past 12 months. Chris Engelbrecht, chairperson of the Association of Southern Africa Sugar Importers (ASASI), said on Tuesday that this was concerning for the entire sugar industry. 'It's worrying that the government could be looking for more ways to collect revenue and conducting these audits could be a way to collect revenue. The beverage industry may be doing well but the sugar industry has its challenges especially with Ilovo Sugar and Huletts,' he said. Engelbrecht added if the manufacturing process was affected in sugar beverages it could lead to loss of profit. 'When there is a loss of profit it can lead to job losses and in South Africa we have high unemployment so this is something we don't want to see. The other factor is when the manufacturing of sugar products is affected. It has a ripple effect on sugar cane farmers due to less demand which will affect their operations.' SA Canegrowers said that they were concerned about the situation and felt the sugar industry already faces challenges with the sugar tax. 'The sugar tax has been nothing but destructive for South Africa. Ultimately, we believe that the [National] Treasury should scrap the tax, to help ensure that the government drives job creation and economic growth, as per its commitments outlined in the Sugarcane Value Chain Master Plan 2030.' BUSINESS REPORT
IOL News
05-06-2025
- Business
- IOL News
Sars launches Project AmaBillions: expect a surge in VAT audits
Discover how Sars' new initiative, Project AmaBillions, is set to increase VAT audits significantly, impacting businesses across South Africa. Learn what steps you can take to ensure compliance and avoid penalties Image: Ziphozonke Lushaba / Independent Newspapers According to recent media reports, Sars has launched a new initiative — Project AmaBillions — as part of its broader strategy to boost revenue collection by an additional R70 billion over the next three years. To support this objective, Sars has reportedly already recruited 500 new staff members, with an additional 1,000 to 1,500 appointments anticipated. While this expanded capacity will enhance Sars' ability to collect, across multiple tax types, Value-Added Tax (VAT) remains an easy target, with a notable increase in VAT-related audits, verifications, and additional assessments already being observed. In this evolving compliance landscape, businesses, particularly those operating in complex or high-risk sectors, are encouraged to revisit their VAT positions and ensure that both legal interpretation and supporting documentation are up to standard. VAT as an Easy Win for Sars The government's recent proposal to raise the VAT rate met significant public resistance and was ultimately shelved. However, the fiscal demands that prompted the proposal remain unchanged. In the absence of a rate increase, an easy target is the enhanced enforcement of existing VAT obligations as a more immediate mechanism to protect the tax base. Given the transactional nature and extensive reach of VAT, it remains one of the most active areas of Sars enforcement, and from a tax collection standpoint, is second only to Personal Income Tax, per Sars' Revenue Announcement for the 2024/25 Financial Year: Except from the 2024/25 Revenue Announcement presentation: Recent trends confirm an increase in audit activity, particularly where VAT positions rely on complex interpretation or are not fully substantiated by documentation. Certain areas are particularly at risk: Input tax deductions , where Sars may challenge the deductibility based on the nature of the underlying expense, its link to taxable supplies, or the quality of supporting invoices; Zero-rated supplies , especially exports, where documentary proof and timing requirements are closely examined; and Apportionment calculations , in cases where businesses make both taxable and exempt supplies, and Sars queries the method used to determine the deductible portion of input VAT. In addition to heightened audit activity, input tax deductions have become increasingly the subject of legal proceedings, with courts being asked to assess whether deductions meet the requirements of the VAT Act. Often, the success or failure of a claim rests both on the commercial reality of the transaction and on whether the taxpayer can demonstrate compliance with the relevant documentary and legal criteria. Discharging the burden of proof As a self-assessment system, VAT places the burden of proof squarely on the taxpayer. Sars does not need to prove a taxpayer is incorrect; rather, it is the taxpayer who must prove that the tax position adopted is correct. Documentary shortcomings that can result in adverse audit findings may include: Incomplete or non-compliant tax invoices; Missing or outdated export documentation; Contracts or agreements that do not support the VAT treatment applied; and A lack of internal policies governing apportionment or exempt supply treatment. Even businesses with reputable systems or historic Sars engagements should not assume automatic compliance. Audit readiness requires continuous alignment with Sars' current expectations and the evolving interpretation of the VAT Act. High-risk for high reward: which businesses are most scrutinised? While all VAT-registered vendors are subject to review, recent enforcement trends suggest that the following types of businesses may be more susceptible to VAT scrutiny, especially in light of the looming 'Project AmaBillions': Exporters of goods and services , particularly where zero-rating is applied; Foreign suppliers of electronic or remote services to South African recipients; Property developers and investors , due to the complexity of VAT on construction, disposals, and mixed-use properties; and Enterprises with substantial input tax deductions or recurring VAT refunds . In these cases, a proactive review of VAT compliance and risk report may assist in identifying and addressing potential exposure, before they are raised by Sars. A Coordinated Tax Debt Collection Strategy 'Project AmaBillions' is more than a revenue slogan — it reflects a deliberate shift by Sars toward coordinated and data-driven enforcement, leading to increased tax revenue collections. This includes the use of Artificial Intelligence tools, targeted audit selection based on risk modelling, and specialised teams focused on high-yield areas such as VAT, High-Net-Worth taxpayers, and Cryptocurrency. With the recruitment of up to 1,500 additional staff, Sars is positioned to expand its enforcement reach significantly over the coming months. Proactive compliance is key While increased audit activity may place pressure on internal finance and tax teams, early intervention and strategic review can help businesses avoid prolonged disputes or unintended liabilities. A targeted VAT review can assist in confirming that: Zero-rated supplies are supported by adequate and compliant documentation; Input tax deductions meet all legal and documentary requirements; Invoicing and contractual frameworks comply with SARS standards; and Internal VAT procedures, including apportionment and record-keeping, are robus t. Early action prevents future exposure Where there is uncertainty around VAT treatment, and businesses find themselves in a potentially precarious position of now facing Sars scrutiny, the best practice is to seek the assistance of a tax professional, ensuring the best compliance strategy is followed. Early assessment can help prevent future challenges, reduce the risk of penalties and interest, and ensure Sars readiness in an increasingly vigilant digitized environment.
The Citizen
04-06-2025
- Climate
- The Citizen
Top 10 stories of the day: Counterfeit alcohol in SA
Here's your daily news update for Wednesday, 4 June 2025: An easy-to-read selection of our top stories. In the news today, research shows how the illicit trade makes up 18% of the South Africa's overall alcohol market. Meanwhile, the Independent Communications Authority of South Africa says Elon Musk's SpaceX has been operating its Starlink satellite internet service illegally in the country. Furthermore, EFF leader Julius Malema has dismissed concerns over former party deputy president Floyd Shivambu's move to parliament with the MK party. Weather tomorrow: 5 June 2025 The weather service has warned of damaging winds in KwaZulu-Natal, while a weekend cold front is expected to deliver icy conditions, snow, and rough seas across inland and coastal areas. Full weather forecast here. Stay up to date with The Citizen – More News, Your Way. How you could be drinking counterfeit alcohol without knowing Illicit alcohol traders are making a fortune selling knock-off liquor to unsuspecting and desperate patrons. Euromonitor International, in partnership with Drinks Federation South Africa (DFSA), this week revealed the runaway popularity of the illicit alcohol trade. Image for illustrative purposes. Picture: iStock Between traders prioritising profits and consumers choosing cheaper options, the country is missing out on just over R10 billion, excluding Value-Added Tax (VAT), on untaxed spirits alone. Through desk research, store visits and surveys across multiple geographic and income demographics, Euromonitor illustrated how the illicit trade makes up 18% of the country's overall alcohol market. CONTINUE READING: How you could be drinking counterfeit alcohol without knowing Icasa seizes Starlink satellite-internet equipment in South Africa [VIDEO] The Independent Communications Authority of South Africa (Icasa) says Elon Musk's SpaceX has been operating its Starlink satellite internet service illegally in the country, and that it has recently confiscated equipment belonging to the company. Starlink has returned to the spotlight in the country following a policy directive from Communications and Digital Technologies Minister Solly Malatsi, which aims to pave the way for the satellite internet service's legal entry into the South African market. Starlink internet-satellite equipment. Picture: iStock Talks on launching Starlink in South Africa stalled earlier this year after Musk and US President Donald Trump ramped up public rhetoric against policies such as BEE laws, which mandate that foreign-owned telecoms companies allocate at least 30% of local equity to historically disadvantaged groups, primarily black South Africans. CONTINUE READING: Icasa seizes Starlink satellite-internet equipment in South Africa [VIDEO] 'Ayakwini yena?': Malema says EFF unfazed by Shivambu's parliamentary return EFF leader Julius Malema dismissed concerns over former party deputy president Floyd Shivambu's move to parliament with the MK party, rhetorically asking, 'Ayakwini yena?' (Where was he going?), while reaffirming that his party's 'superior' presence in parliament remains unchallenged Speaking to the media outside the home of late actor Presley Chweneyagae in Soweto, where he had come to pay condolences, Malema addressed several pressing political issues, including Shivambu's new role, calls for black unity, and local governance matters. EFF leader Julius Malema. Picture: Neil McCartney/The Citizen The MK party on Tuesday removed Floyd Shivambu as secretary-general of the party. This follows an investigation into Shivambu's trip to Malawi to visit fugitive Pastor Shepherd Bushiri's Enlightened Church. CONTINUE READING: 'Ayakwini yena?': Malema says EFF unfazed by Shivambu's parliamentary return Mashatile reveals he spent R2.3m on travel, food, and laundry for Japan trip Deputy President Paul Mashatile has disclosed that he spent R2.3 million on a single working visit to Japan in March 2025, with expenses including flights, accommodation, ground transport, restaurant services, and laundry costs. This latest revelation adds to previous travel expenditure totalling over R5.5 million since taking office in July 2024. Deputy President Mashatile. Picture: Gallo Images The revelation came in response to a parliamentary question from ActionSA MP Lerato Mikateko Ngobeni, who requested a complete breakdown of all official travel undertaken by Mashatile since assuming office on 3 July 2024. Mashatile confirmed that he undertook four official international trips since the specified dates. CONTINUE READING: Mashatile reveals he spent R2.3m on travel, food, and laundry for Japan trip Winter wonderland: Snow expected in Gauteng next week The last time it snowed in Johannesburg, Gauteng was on the 10th of July 2023 when the South African Weather Service (Saws) confirmed that various parts of the province was covered in a white. With the latest weather forecast and a cold front looming, Gauteng may once again be transformed into a winter wonderland next week. A snowman admires the snow that blanketed several areas in Gauteng. Picture: Twitter/@newslivesa According to Vox Weather, the mercury is expected to drop below 20°C as residents scurry to get their blankets out and keep warm. CONTINUE READING: Winter wonderland: Snow expected in Gauteng next week Here are five more stories of the day: Yesterday's News recap READ HERE: Top 10 stories of the day: Shivambu removed as MK Party SG | Fuel levy hike goes ahead | Presley Chweneyagae memorial
The Citizen
04-06-2025
- Business
- The Citizen
How you could be drinking counterfeit alcohol without knowing
A recent study has shown the illicit alcohol trade has increased by 55%, costing the South Africa roughly R25 billion in lost tax revenue. Illicit alcohol traders are making a fortune selling knock-off liquor to unsuspecting and desperate patrons. Euromonitor International, in partnership with Drinks Federation South Africa (DFSA), this week revealed the runaway popularity of the illicit alcohol trade. Between traders prioritising profits and consumers choosing cheaper options, the country is missing out on just over R10 billion, excluding Value-Added Tax (VAT), on untaxed spirits alone. Almost 20% of all alcohol Euromonitor's most recent study, conducted over the last six months, was presented to industry leaders virtually on Wednesday. To gauge how illicit alcohol was distributed and consumed, the global research firm surveyed the product's prevalence in retail and independent traders, as well as the habits and preferences of consumers. Through desk research, store visits and surveys across multiple geographic and income demographics, Euromonitor illustrated how the illicit trade makes up 18% of the country's overall alcohol market. This 18% amounts to the consumption of 773000 hectolitres — or 77 million litres a year— with an estimated price tag of R25 billion. 'This is largely driven by counterfeit and illicit brands. This is because counterfeiting and illicit brands target premium spirits such as whiskey, as well as premium vodkas and gins,' stated Euromonitor International Project Manager Benjamin Rideout. This translated into R16.5 billion in lost tax revenue, with South Africans' preference for white and dark spirits contributing to roughly R10 billion of the tax shortfall. 'If these drinks were taxed correctly and sold legitimately, this is what the tax value would be,' explained Rideout. Increasing fiscal loss Euromonitor stated that illicit traders were purchasing and manufacturing counterfeit labelling and packaging at an 'industrial scale'. While the main driver of lost tax revenue was counterfeit and illicit brands, which are replica and unbranded products, smuggling and tax leakage were the next highest causes. Smuggling of legitimate products is done via land, air or sea, while tax leakage was classified as compliant liquor that is intentionally misclassified or underdeclared. Having conducted the same study in 2017 and 2020, Rideout said the illicit alcohol trade in South Africa had grown in volume consumed by 55% in the last seven years. 'It has almost doubled in value terms, which is a function of inflation in general. Finally, the fiscal loss has increased by 157%,' Rideout said illicit alcohol was predominant in informal channels, but there was a growing trend of availability in retail and online sales. 'What this means is that the illicit market has established a distribution network, and we know this to be the case, particularly in Gauteng and KwaZulu-Natal. 'On average, illegal alcohol is 37% cheaper than legal alcohol per litre. In some cases, this discount can go as high as 70%, depending on the category and the brand,' he stated. 'Crime against the state' Euromonitor noted that the financial benefits to traders and buyers were given greater consideration than the potential health risks considered by either party. Convenor of the National Liquor Traders Council Lucky Ntimane said it was an outlets' responsibility to ensure they maintained high standards or risk ruining their reputations. 'We also know the catch of illicit alcohol is the price, so people don't really ask a lot of questions. The essence of illicit and counterfeit alcohol is that it is cheaper. 'However, a person who sells counterfeit, knowingly or unknowingly, they run the risk of their business not being supported,' Ntimane told The Citizen. Traders caught selling illicit alcohol can be subject to a fine of up to R500 000 or between one and three years in prison, depending on the volumes sold. Rideout stated that policing challenges included 'resource allocation and state capacity,' while Ntimane suggested a firmer hand needed to be taken with illegal traders. 'Because illicit and counterfeit alcohol robs the state of an income, maybe it should be classified as a crime against the state. In that way, the government can clamp down hard on these unscrupulous dealers, but also harsher sentences can be meted out,' concluded Ntimane. NOW READ: Budget speech: Here's how much more you'll have to pay for alcohol and cigarettes
IOL News
28-05-2025
- Business
- IOL News
EFF threatens court action over proposed fuel levy increase
EFF treasurer-general Omphile Maotwe has written to Finance Minister Enoch Godogwana rejecting the fuel levy. Image: Nhlanhla Phillips / Independent Newspapers The EFF has written to Finance Minister Enoch Godongwana, with an ultimatum, demanding the withdrawal of the proposed fuel levy increase, citing constitutional and legislative obligations or face more court action. The party argues that the increase, effective June 4, 2025, is a regressive tax that will disproportionately affect the working class and poor. Godongwana was given 48 hours to respond to the Red Berets' demands, or risk further escalation of the Budget crisis. Godongwana's spokesperson, Mfuneko Toyana, declined to comment on the matter; however, confirmed that the department had received the letter. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ The Budget is, however, yet to be passed in the National Assembly. The EFF's letter comes amid the ongoing drama surrounding the 2025 Budget. The party, with the help of the Government of National Unity (GNU) aligned DA, had previously successfully challenged the Value-Added Tax (VAT) increase in court, which was declared invalid and withdrawn. However, the National Treasury has now proposed to increase the general fuel levy by 16 cents per litre on petrol and 15 cents per litre on diesel, as outlined in the May 2025 Budget Review. In a lengthy letter penned by party treasurer-general, Omphile Maotwe, the EFF argues that the fuel levy increase will have a devastating impact on the working class and poor, exacerbating the cost-of-living crisis and placing undue pressure on households already struggling with rising food and transport prices, stagnating incomes, and unemployment. "The proposed fuel levy increases, though seemingly modest in nominal terms, will have disproportionate effects on the working class and poor, as they cascade through transport, food, and essential goods pricing," Maotwe wrote. The EFF also argues that the fuel levy increase is unconstitutional, as it seeks to impose a national tax through executive regulation rather than through a legislative process governed by the Constitution and relevant statutes. "The fuel levy is a national tax, paid by every South African, directly or indirectly. It cannot be increased through a Government Gazette notice or regulation," the party said. The EFF has formally requested that the minister withdraw the proposed increase. The party has also demanded that the minister refrain from issuing any Gazette or regulatory notice under the Customs and Excise Act until this tax measure has been lawfully processed via a Money Bill.
