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Planned VAT hike cancelled – TEPA provides guidance on reversal and compliance

Apr 28, 2025 Tyre, Equipment, Parts Association (TEPA), Dylan Petzer,


Planned VAT hike cancelled – TEPA provides guidance on reversal and compliance

 

The Tyre, Equipment, Parts Association (TEPA), has welcomed the Minister of Finance’s announcement on 24 April 2025 confirming that South Africa’s standard VAT rate will remain at 15%, and that the previously proposed increase to 15.5%, due to take effect on 1 May 2025, has been officially withdrawn.

 

Dylan Petzer, TEPA National Vice-Chairman, notes that while the decision may bring some relief to consumers and businesses alike, the last-minute nature of the reversal presents a number of operational and administrative challenges for businesses who had already begun adjusting their systems. “Many vendors had already initiated updates to invoicing, billing and accounting systems to accommodate the expected increase. The sudden reversal, although welcomed from an economic perspective, requires an immediate and coordinated response to ensure compliance and maintain accurate VAT reporting,” says Petzer.

 

In its latest communication, the South African Revenue Service (SARS) acknowledged the complexity of the situation and confirmed a grace period until 15 May 2025 for businesses in the process of reverting their systems back to the 15% VAT rate. 

 

Key guidance includes:

•   Ceasing any implementation of the 15.5% VAT rate: All system updates should be halted with immediate effect.

•   Maintaining the current 15% VAT rate: All taxable goods and services must continue to reflect the 15% rate post-1 May 2025.

•   Correcting premature changes: Businesses that have already made system changes may utilise the SARS-specified reporting fields on their VAT201 return - Field 12 for output tax and Field 18 for input tax - during the transition period.

•   Processing adjustments and refunds: Any discrepancies, including overcharges or supplier invoicing at 15.5%, must be rectified through credit notes or refunds and reported correctly.

•   Reviewing pricing and quotations: Any documentation or marketing materials showing the 15.5% VAT rate must be revised to reflect the correct 15% rate.

 

Petzer emphasises that TEPA remains committed to supporting small business through this regulatory shift. “While the reversal aims to alleviate inflationary pressure, the administrative burden on businesses should not be underestimated. It is critical for organisations to act swiftly and ensure all compliance measures are met to avoid errors and penalties.”

 

TEPA encourages all business owners, especially those involved in financial, operational and IT functions, to familiarise themselves with the SARS guidelines and ensure their systems and documentation are fully aligned with the revised VAT position.

 

For further updates and support, businesses are advised to refer to the official SARS website or contact their tax practitioners.
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