(rawpixel)

An expert panel’s report into zero-rated value-added tax items (VAT) was released by the National Treasury on Friday afternoon.

It recommended that white bread, sanitary products, school uniforms and nappies be zero-rated VAT items. 

The panel, which included experts from the universities of Stellenbosch, the Witwatersrand, and Cape Town, was appointed after former finance minister Malusi Gigaba increased VAT from 14% to 15% in February. 

SEE ALSO: Bread prices are falling as South Africans switch back to pap

The panel considered a list of 66 products to be zero-rated, including mango achar and medicine, based on submissions it had received from members of the public. 

It, however, concluded that only baby food, bread flour, cake flour, disposable nappies, poultry, sanitary products, school uniforms and white bread are worthy to be further investigated for zero-rated VAT items.

READ: The 18 biggest mistakes you can make on your tax return this year

The final list of recommended zero-rated products is estimated to cost the National Treasury R4 billion in lost revenue if fully implemented. 

Here are some of the products the panel considered – but did not recommend should be excluded from the 15% tax. 

Internet fibre and broadband  

(pexels)


Chronic and life-saving medicines

(pexels)

There were several proposal received to make prescription medicines and life savings medicines VAT free.


Low-GI bread

(unsplash)


Poultry and red meat 

(unsplash)

The panel rejected a proposal to make poultry VAT-free, saying it might cost Treasury 10% of additional revenue the 1% VAT increase brought. The Red Meat Industry Forum’s proposal to the panel that all red meat be VAT free was not even investigated by the panel. 


Water 

(unsplash)

The report didn't specify whether the submission was made to make bottled water or municipal water VAT-free. 


Mango atchar 

(Makro)

Pieter Joubert, a mango farmer and atchar manufacturer from Tzaneen, suggested that the Panel recommend that atchar be zero-rated. His suggestion was also supported by a submission from the South African Subtropical Growers’ Association. In total five submissions were received to make Mango atchar zero-rated. 


Baby formula

The panel recommended that baby food and formula should not be zero-rated after it received several submissions over fears of public health. Formula use is specifically associated with higher death rates in low-income countries, where households do not have access to clean water and where the high cost may lead parents to dilute it excessively, the report said. 


Yoghurt 

(pexels)


Canned fruit and vegetables

(Heinz)

The Rhodes Food Group, which produces canned fruit and vegetables, proposed that canned fruit and vegetables be VAT-free.