‘Firms ready for January 1 launch of Vat’


07-September-2012

  

 

Minister Laporte (centre) responding to questions at yesterday’s press conference

The Minister for Finance, Trade and Investment Pierre Laporte said this Thursday noting the change should not cause a rise in the cost of living and may in cases result in a drop in some costs.

The launch of Vat was due for July 1 this year but was postponed for various reasons including insufficient administrative and operational preparedness and concerns over potential inflationary impact.

Subsequently, the Ministry of Finance, Trade and Investment (MFTI) carried further in-depth analysis of the impact of this new tax and engaged in intensive consultations with the different sectors of the economy to better understand and address these concerns.

“Government approved a recommendation by the MFTI on the issue this week.

 This approval followed a series of consultative meetings since last July. All businesses with a turnover of R5 million and above will automatically fall under the Vat regime,” said Mr Laporte.

“One of the public’s key concerns was fear over the potential impact on the cost of living.

MFTI’s analysis shows that since all basic items currently exempted from GST will also Vat-exempt, and the fact that the list of exempted commodities has been expanded to include new essential food items, such as meat, bread, vegetables and fruits, the cost of living should not increase in any significant way; in some cases prices should decrease,” he said, adding further additional measures to mitigate any potential increase will be announced during the 2013 budget presentation.

Mr Laporte said the consultations with the private sector have also allowed the MFTI to address other concerns raised previously by the private sector.

 “Evidence is the fact that most private sector operators are now in favour of Vat. About 390 companies will automatically fall under the R5 million Vat threshold while 98 others have registered to be voluntarily covered by Vat.

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