{"id":240711,"date":"2018-04-25T15:23:35","date_gmt":"2018-04-25T13:23:35","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=240711"},"modified":"2018-04-25T15:23:35","modified_gmt":"2018-04-25T13:23:35","slug":"south-africa-is-looking-at-new-zero-rated-vat-items-but-the-whole-system-could-be-overhauled","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/240711\/south-africa-is-looking-at-new-zero-rated-vat-items-but-the-whole-system-could-be-overhauled\/","title":{"rendered":"South Africa is looking at new zero-rated VAT items &#8211; but the whole system could be overhauled"},"content":{"rendered":"<p>The Ministry of Finance has announced the appointment of an independent committee of experts to review the current list of VAT zero-rated food items.<\/p>\n<p>The current VAT system allows for 19 basic food items to be taxed at a rate of 0%. This zero-rating of food items was introduced as a means of providing some relief to low-income households as these households spend a high proportion of their income on those food items.<\/p>\n<p>Since the increase in the VAT rate has been announced, concerns have been raised about the impact of the increase in the VAT rate on poor and low-income households.<\/p>\n<p>The committee has therefore been tasked identifying additional items which may be added to list, to help combat the effects of the VAT increase.<\/p>\n<p>According to the committee&#8217;s terms of reference <strong><a href=\"http:\/\/www.treasury.gov.za\/comm_media\/press\/2018\/2018042501%20Terms%20of%20Reference%20-%20VAT%20Zero%20Rating%20Panel.pdf\" target=\"_blank\" rel=\"noopener\">published<\/a> <\/strong>on Wednesday (25 April), these new items need to meet the following criteria:<\/p>\n<ul>\n<li>The absolute and proportional benefit likely to accrue to low-income households<\/li>\n<li>Market structure, to determine likelihood of producers passing benefit on to customers<\/li>\n<li>Ease of administration<\/li>\n<li>Potential for abuse<\/li>\n<li>Estimated revenue loss<\/li>\n<\/ul>\n<p>In addition the committee has been tasked with\u00a0evaluating the current list of 19 zero-rated food items.<\/p>\n<p>This includes looking at whether they truly benefit low-income households, and benefits derived from the zero-rating by both lower and higher-income households respectively.<\/p>\n<p>It will also consider whether the system may be better suited by &#8216;disaggregating these items&#8217;\u00a0(which are currently expressed as broad categories such as &#8216;brown bread&#8217;) by instead specifically targeting products for zero-rating.<\/p>\n<p><strong>Other measures<\/strong><\/p>\n<p>The final task of the committee is looking at possible &#8216;mitigation measures&#8217; other than expanding the zero-rated VAT items list.<\/p>\n<p>According to the terms of reference this includes:<\/p>\n<ul>\n<li>Exploring whether the outcome of zero rating of food items cannot be better achieved by a government expenditure programme;<\/li>\n<li>Whether a government expenditure programme is more efficient in targeting poor and lower income households than the zero rating of food items;<\/li>\n<li>Whether current government programmes can be better tailored to achieve the same or a better outcome than the zero rating of food items.<\/li>\n<\/ul>\n<p>The committee is expected to deliver its final report by 30 June 2018.<\/p>\n<hr \/>\n<p><strong>Read:\u00a0<a href=\"https:\/\/businesstech.co.za\/news\/business\/237079\/company-car-vs-travel-allowance-heres-what-wins-out-with-south-africas-new-tax-changes\/\" target=\"_blank\" rel=\"noopener\">Company car vs travel allowance \u2013 here\u2019s what wins out with South Africa\u2019s new tax changes<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Ministry of Finance has announced the appointment of an independent panel of experts to review the current list of VAT zero-rated food items.<\/p>\n","protected":false},"author":10,"featured_media":224458,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[26],"class_list":["post-240711","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/240711","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=240711"}],"version-history":[{"count":17,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/240711\/revisions"}],"predecessor-version":[{"id":240745,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/240711\/revisions\/240745"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/224458"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=240711"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=240711"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=240711"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}