- Due to political backlash, South Africa’s government has abandoned its proposed 1% VAT rate increase and is focusing on expanding VAT investigations and enforcement to address revenue shortfalls.
- The South African Revenue Service (SARS) has launched Project AmaBillions, aiming to raise an additional R70 billion over three years by significantly enhancing its audit capacity, with plans to recruit up to 1,500 new staff.
- This initiative emphasizes the importance of VAT compliance, particularly through scrutiny of input tax deductibility, apportionment methodologies, and zero-rating of exports.
- VAT is a strategic focus for SARS as it is a major contributor to total revenue, second only to personal income tax. Recent enforcement trends indicate a stringent approach towards non-compliance in areas such as input tax deductions and proper documentation.
- Businesses are advised to review their VAT positions and ensure compliance with updated regulations to avoid penalties.
- There has also been an increase in VAT-related legal challenges, where the outcome often depends on the quality of documentation and adherence to legal requirements.
- Overall, businesses must prepare for heightened scrutiny and ensure that their VAT practices are robust and compliant.
Source: vatcalc.com
