VAT threshold, unchanged for 16 years, placing burden on small businesses

The compulsory threshold for value-added tax (VAT) registration VAT for businesses in South Africa, has not been adjusted in 16 years.

It has remained at R1 million since 2009, despite obvious ongoing increases in inflation.

The R1m threshold should have doubled by now, writes Amanda Visser for Moneyweb.

Stephen Grootes interviews Charles de Wet, tax executive at law firm ENSafrica.

While the VAT registration threshold is not necessarily something that should be changed annually, it should be increased 'relatively often', de Wet says.

"2009-2025 is a very long time if you think that inflation has been more than 5% on average during that period. It's definitely time for it to change."

"If you use the inllation rate and shift that R1m threshold to today, it's nearly R2.3 million."

Charles de Wet, Tax Executive - ENSafrica

Also weighing in on The Money Show is Public Interest SA's Tebogo Khaas, global chief entrepreneur at the Institute of Chartered Entrepreneurs.

The current regulatory compliance burden that is being pushed on small business and entrepreneurs is of real concern, Khaas says.

While there is a need to reform the VAT compliance landscape, he believes there are deeper structural reforms needed beyond this framework as well.

Scroll up to the audio player to listen to the discussion