CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. South Africa's Davis Committee Didn't Propose VAT Hike

South Africa's Davis Committee Didn't Propose VAT Hike

by Lorys Charalambous, Tax-News.com, Cyprus

20 August 2015


The Davis Tax Committee (DTC) has clarified that it did not explicitly recommend an increase to the South African value-added tax (VAT) rate in its first interim report on the tax, published last month.

The DTC's interim report included proposals on the tax gap, zero rating, dual (multiple rates), exemptions, place of supply rules, and rules on e-commerce. The Committee said, contrary to some recent commentaries, its report only discussed the potential impact on the economy of raising the VAT rate.

As far as an increase to the current South African 14 percent VAT rate is concerned, the report states that it would be "somewhat inflationary in the short-run," while an increase in personal or corporate income tax rates would be "much less inflationary." On the other hand, a VAT rate rise would have a lesser effect on economic growth than income tax rate rises.

The report says an increase in VAT would be more regressive. "Should it be necessary to increase the standard rate of VAT," the report concluded, "it will be important for the fiscal authorities to think carefully about compensatory mechanisms for the poor who will be adversely affected by the increase."

The report later discusses the macroeconomic impact of raising VAT but this time through economic modeling. "It does not prescribe a three percent increase in VAT, but merely uses this figure for illustration and modeling purposes to compare VAT with personal and corporate income taxes as revenue-raising tools," the Committee clarified.

TAGS: South Africa | tax | value added tax (VAT) | fiscal policy | commerce | tax rates | Africa | Tax

To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »