SD UNDER PRESSURE ON ZERO RATED ITEMS?

MBABANE – Will Minister of Finance Martin Dlamini and his budget technocrats emulate the review of zero-rated items the same way it did when it increased VAT?

This question emanates following developments in South Africa that Finance Minister Nhlanhla Nene has requested the chair of the Davis Tax Committee‚ Judge Dennis Davis‚ to appoint a panel of independent experts to review the current list of zero-rated items and consider the most effective way to mitigate the impact of the increase in the VAT rate on poor and low-income households.

Nene’s request puts Swaziland under pressure the same way when the then Minister of Finance Malusi Gigaba did when he increased VAT from 14 per cent to 15 per cent.
If South Africa successfully reviews its list of zero-rated items, Swaziland will have to follow suit to enable the easy declaration of VAT by vendors. Swaziland and South Africa implemented the Sekulula VAT Easy – a system that enables suppliers not to part with cash on importation of goods purchased from VAT registered shops in South Africa.

Another main pillar of Sekulula VAT Easy is the same consumption tax rate between the two countries. This makes it easier and cost effective to administer the scheme. If Swaziland sits at different rates it may present administrative challenges for the country.

Regarding the zero-rated items, this system will require that zero-rated items in South Africa have to be declared zero-rated even here in Swaziland and the opposite is true regarding VAT exempt supplies. It is for that reason that Swaziland will find itself under immense pressure to review its zero-rated items as well because it buys. Observably, the list of zero-rated items of South Africa is the same as those of South Africa. There are about 19 food items that are currently free from VAT.

A tax expert who commented on condition of anonymity said Swaziland will be left with no choice but to review the list of zero-rated items so that it would be easy for suppliers to declare. The expert went on to say that the forced review would benefit the poor as the pool of zero rated basic commodities will be expanded.
“It is good news that South Africa would be doing the review and Swaziland has to do it as well to enable smooth trade between the two countries,” the expert said.
Efforts to get the Minister of Finance Martin Dlamini and Principal Secretary Bheki Bhembe were futile as their cellphones rang unanswered yesterday.   
According to South African publication – Business Day, a statement from the National Treasury on Thursday evening said the review would also consider expanding the list of basic food items that were VAT zero-rated.
Business Day reported that it would also consider how specific expenditure programmes such as the National School Nutrition Programme and food stamps among others could be improved to better target poor and low-income households.

“The Minister of Finance and Judge Davis have agreed to appoint Professor Ingrid Woolard to lead this process‚ together with prominent experts. A full list of panel members and comprehensive terms of reference will be published in the next fortnight‚ including a draft programme of work. The panel will take public comments‚ and convene hearings‚ and will engage with different stakeholders from civil society organisations‚ organised labour and business‚ and all interested parties‚“ Treasury stated.

“The panel is expected to deliver an initial report with all the options and recommendations to the minister of finance by June 30, 2018‚ in time to be considered by Cabinet for incorporation in the draft tax legislation that will be published in early July. Parliament will then consider the bills‚ and provide for its own public hearings‚“ it added.

Post your comment

Your name:

Your e-mail address:

Add your comments:

Please enter the code you see in the image:

Image:

Code: