Guidance on expected 1 May VAT increase
As you might know, the Minister of Finance announced an upcoming VAT rate increase during the Budget Speech on 12 March 2025. The VAT rate is expected to increase to 15.5% on 1 May 2025 and to 16% on 1 April 2026.
Key Considerations for Your Business
The South African Revenue Service (SARS) has provided initial guidance on implementing this VAT increase once it comes into effect. Click here to access the guidance document, including how it applies to invoicing, ongoing contracts, and forward bookings.
Based on feedback from BDO, our tax advisory partner, members must consider the guidance document (especially question 58) and consult their tax practitioners for definitive advice should the examples SARS provided not meet their specific circumstances.
We also recommend that members:
- Review existing invoices and contracts for bookings and services that extend beyond 1 May 2025, in preparation for the expected increase.
- Monitor SATSA’s News and SARS announcements closely to ensure compliance with forthcoming time-of-supply clarifications.
- Adjust accounting systems and point-of-sale processes to reflect the new VAT rate once in full effect.
- Be mindful of pricing and communication with clients regarding VAT adjustments on future invoices.
- Consult with your tax practitioner for advice and guidance on different scenarios that may arise, as a result of the expected increase.
Further Assistance
Should you wish to consult directly with BDO, please complete their contact form here.
