News Details

What does the 2018 National Budget have in store for businesses?

15.03.18 AHK Süd-Afrika - News-Hauptkategorie, Member News

Johannesburg, 6 March 2018 – South Africans have been anxiously awaiting the revelations of Minister Malusi Gigaba’s budget speech. Would there be any drastic changes made in light of the change in leadership? What does the 2018 National Budget plan mean for local businesses and foreign investors? To answer these questions and put minds at ease, the Southern Africa-German Chamber of Commerce and Industry hosted an analysis of Minister GIgaba’s budget speech, presented by recently established tax advisory firm, WTS South Africa (a member of WTS Global).

The team from WTS gave an exhaustive analysis covering VAT, Customs, Transfer Pricing, Corporate Tax, Employee tax and Expatriate Taxes, etc. and focusing on how the government’s budgets plans would impact businesses operating in South Africa as well as briefly touching on the impact on individual citizens. The good news is that any major amendments to last year’s budget are few. The bad news is that these few changes do carry a lot of weight.

Of particular concern, of course, was the increase in Value Added Tax (VAT) to 15%. This increase was made on the basis that the last increase to VAT was made in 1993 and that South Africa’s VAT rate is remarkably low compared to other jurisdictions eg UK 20%. In response to this increase, vendors are encouraged to update their websites, contracts, tax code structures for VAT purposes affecting both primary ERP systems all sub-systems, particularly point-of-sale systems. Aside from the previously applied three codes (zero rate, standard and exempt), vendors will now be required to use a separate or additional code(s), for reporting and various reconciliation purposes. In terms of anti-avoidance policies, South Africans will see similar trends to what was seen in the UK, such as manipulations of sales prior to the effective date, when their VAT rate was increased. Vendors are encouraged to be aware of the specific anti-avoidance VAT rules when considering similar initiatives. In cases where tax invoices are issued on or after the rate change and therefore incorrectly reflect the 14% VAT, vendors will only be able to claim the 14% VAT charged. Registered importers and clearing agents must also ensure that the customs declarations reflect the new 15% VAT rate, when goods are entered for home consumption as of 1 April 2018. This VAT increase may also lead to an increase in deferment account charges raised by such agents.

While the budget speech did not make mention of BBBEE (Broad-Based Black Economic Empowerment) legislation, it is likely that, if there is a cabinet reshuffle, the BBBEE codes are sure to follow, according to Charl Niemand of WTS.

After the presentation, guests were invited to asked questions of the speakers, before the gathering broke up for refreshments and networking. Guests said they were glad that they attended this event as it offered them a clearer picture of how to proceed in their business dealings in light of the implications of the budget speech, particularly with regard to the new VAT rate.

About WTS South Africa

WTS South Africa is a member of WTS Global, which operates in more than 100 countries and deliberately refraining from doing statutory audits, and commenced business in September 2016. WTS SA offers a full fleet of tax advisory and compliance services predominantly to medium and large multinational entities..

Southern African-German Chamber of Commerce and Industry
The Southern African-German Chamber of Commerce and Industry has been operating in Southern Africa for over 65 years. Bringing together potential business partners is one of our key service offerings. We foster business links between Germany and Southern African companies through comprehensive and target group oriented researches, workshops, seminars and business delegations that bring you in contact with competent business partners in your industry. Contact the Chamber to get connected with German and southern African businesses at info(at); or call +27 11 486 2775.