In early 2018, the Government announced a 1% Value-Added Tax (VAT) increase, which will come into effect on 1 April 2018.
“We have not adjusted VAT since 1993, and it is low compared to other countries. We therefore decided that increasing VAT was unavoidable if we are to maintain the integrity of our public finances,” maintained Finance Minister Malusi Gigaba during his budget speech in February.
In a nutshell, the main reason for the increase (from 14% -15%) is to stabilise South Africa’s financial situation. The Treasury is hoping this will help collect the R22.9 billion of the R36 billion in additional taxes needed to make a significant impact. Essentially, VAT is important because it generates revenue for the Government to help run the country effectively.
What exactly is VAT?
VAT is an indirect tax, which means the government gets money from the manufacture or sale of goods and services, rather from direct payments from the tax payer. Consumers pay an additional amount on top of the final sale price in order to be compliant with the tax laws of South Africa.
Are there any zero-rated tax items?
There are some basic staple food items that consumers do not pay VAT on (milk and brown bread, for example) as well as on certain government grants and the exporting of goods.
Will the tax increase affect LAW FOR ALL premiums?
As a legal services provider, LAW FOR ALL’s products are subject to VAT, and premiums will increase on 1 April 2018. LAW FOR ALL prides itself on offering quality services that make the law accessible and affordable for all South Africans. LAW FOR ALL does everything in its power to keep monthly premiums as low as possible without compromising on excellence.
What are the new premium amounts?
For more information, feel free to call LAW FOR ALL on 0861 10 22 51.