The Minister of Finance announced an increase in the rate of value added tax (VAT) to 15%, effective beginning from 1 April 2018.
South Africa’s VAT law includes rules that address when there is an increase in the VAT rate. These rules address situations such as what happens when contracts have been entered into before the date on which the VAT rate is increased but no invoice has yet been issued or payment has not yet been received (that is, the time of supply for VAT purposes has not yet happened).
Given the VAT rate increase, the following rules apply:
What are the rules when the time of supply (invoice or payment) falls between the date when the VAT rate was announced (21 February 2018) and ends on 1 April 2018? If the goods will be provided more than 21 days after 1 April, or the services will be performed after 1 April, the new VAT rate of 15% would apply on the supply of goods or services. However, there are certain exceptions to this rule. Also, this rule prevents invoices dated before 1 April when goods will be supplied more than 21 days after the effective date on 1 April.
Read a February 2018 blog report posted by the KPMG member firm in South Africa
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