Every till, every advertisement, and every tax system must now use the new VAT rate – with this one exception
- The VAT rate increased by one percentage point on 1 April, and the revenue service expects everyone to be compliant.
- Failure to reflect the new tax rate in prices, quotations, and advertisements could come with penalties.
- But retailers have until the end of May to update sticker prices in their stores.
Every till in every shop, every tax system in every business, and any advertisement that carries a price, must now be updated to reflect the one percentage point increase in value added tax (VAT).
And only one excuse will be entertained.
"Vendors should test the systems for errors, and check that transactions are processed and reflected at the correct VAT rate, in order to avoid disputes with customers," the SA Revenue Service (Sars) said in a guide to the update published in March.
"Remember that prices are deemed to include VAT at 15%, so a vendor may incur penalties and interest where the output tax is under declared as a result of the incorrect VAT rate used."
See also: VAT is going up on 1 April no matter what anyone does – simply because that's the way Parliament works
Simply swallowing the increase in tax while systems are update is not an option; any tax invoice for goods or services worth more than R50 is required to show the price without VAT, the tax, and the final inclusive amount.
The same hold for price quotations – and advertising materials.
"All prices advertised or quoted by vendors for taxable supplies must include VAT at the standard rate (unless the supply is zero-rated). Vendors must state that the price includes VAT in any advertisement or quotation, or the different elements of the total price must be stated. That is, the total amount of VAT, the price excluding VAT and the price inclusive of VAT," Sars said in its guide.
"Vendors must therefore check that all price tickets, labels, quotations, advertisements, etc., reflect the new VAT rate of 15% from 1 April 2018."
Retail stores have received the only break: the get an extra two months to update their in-store prices on shelves and products.
During April and May, stores will be allowed to adjust prices at tills – provided that they put up unmistakable notices to say their prices are still calculated on the previous 14% take rate.
"The notice must be prominently displayed at all entrances to the business premises and at all points where payments are effected. The notice should be removed by no later than the end of May 2018," Sars said.
Update: this article was originally published some two weeks before the increase in VAT. It was updated on 31 March 2018 to reflect the imminent change in the tax rate, and updated again on 1 April.
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