Finance Minister Pravin Gordhan will deliver his budget speech today, with experts predicting he will announce an increase in the country’s VAT rate.
Tertius Troost, a tax consultant for Mazars, recently stated that raising value-added tax may prove a fair and quick way to increase revenue.
Troost said VAT has remained unchanged for quite some time in the country.
Value-added tax is an indirect tax on “the consumption of goods and services in the economy”.
“Revenue is raised for government by requiring certain businesses to register and to charge VAT on the taxable supplies of goods and services. These businesses become vendors that act as the agent for government in collecting the VAT,” said SARS.
VAT in South Africa currently sits at 14%.
VAT – SA vs The World
The table below lists the standard VAT rates in several countries around the world, including South Africa.
Many countries allow for “reduced rates” on certain goods, along with “zero rates” on selected sales, which is not indicated in the table.
Countries like the USA and Canada also have VAT rates that vary, depending on the province or state where the transaction is conducted.