Are you ready for the VAT rise in South Africa?

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On the 1st April, for the first time in 25 years, the South African government is increasing the standard rate of Value Added Tax to 15%.

The aim of this tax hike is to reduce the risk of future debt and inject some life back into the country’s industrial output. Good news for the economy – less so for a business owner’s current workload.

There’s some useful technical guidance from SARS but I’d also advise checking with an accountant if there is anything you are unsure about. Check out the Xero Partner Directory to find someone who can help you.

To support his change, this is what Xero will be doing between now and the last day of March 2018:

Updating the new 15% VAT rates. The old 14% rates will be renamed
The default VAT rates will remain at 14%

And automatically from the 2nd April 2018, we will

Update default VAT rates on Inventory, Contacts & Chart of Accounts to 15%

This is what we won’t be doing immediately:

Accounts receivable draft or awaiting approval invoices
Accounts payable draft or awaiting approval invoices
Draft manual journals
Repeating transactions

So, be sure to review the above and:

Check that the correct VAT rate is used
Check VAT rates on draft documents
Review repeating invoices

It’s not long until the new financial year starts. It may seem like SARS has burdened us with unnecessary administration to kick things off with, that still shouldn’t detract from the fact that it is also a great time to give small businesses a fresh start.

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