VAT could fall to 6%

PROPOSAL: MOVES TO SALES-TAX MODEL WITHOUT INPUT CLAIMS

- Amanda Visser

SIGNIFICANT CHANGE. National Treasury has 'noted' the PKF proposal, saying it would represent a reversal from the international trend away from sales taxes to value-added taxes.

(Picture: AdobeStock)

A proposed amendment to South Africa's value-added tax (VAT) system could eliminate VAT refund fraud and reduce the rate significantly without compromising revenue collections.

The proposal is to have a system that resembles a sales tax by disallowing VAT input claims and to rely solely on the payment of output tax, but at a rate as low as 6% compared to the current 15%.

PKF, a mid-tier accounting firm offering audit, tax and business advisory services, proposed the alternative system to the envisaged VAT Modernisation Project that will require all businesses to account and report for VAT on a real-time basis.