The South African Revenue Service (SARS) has given directives to vendors on how to process VAT claims following the decision by the government to scrap the increase to 15.5 percent – from 15 percent.

In the directive issued on 25 April 2025, SARS Commissioner Edward Kieswetter said the decision has significant practical implications for VAT vendors and consumers. As such, SARS – as the administrator of all national government tax measures – will ensure that the necessary adjustments are made to accommodate this change.

Kieswetter acknowledged that vendors and consumers have invested in preparing for an increase in VAT during a period of uncertainty from Parliament’s deliberations and public comments.

The directive says VAT vendors who have not implemented the change in rate must stop all development in this regard.

“Vendors are expected to charge VAT at the rate of 15% and not 15.5% for the relevant goods and services as per the VAT Act. Vendors may use limited time to adjust their systems accordingly. and report and pay the VAT. Should a vendor not be able to revert to the 15% rate, due to complex system changes that may be needed, such supplies and purchases must be reported and accounted for at the 15.5% rate until such time that you are able to make the necessary system adjustments which should be completed by no later than 15 May 2025.

“VAT transactions which were charged at 15.5% must be reported in filed 12 (for output tax) and field 18 (for input tax) of the VAT return. Adjustments in the form of refunds of the 0.5% rate to customers and from suppliers must equally be reported in fields 12 and 18 respectively,” reads the directive.

Moreover, he said that the VAT return declarations made will be taken into consideration when verifications or audits on the affected VAT tax periods are conducted.

“The VAT returns that are to be submitted will continue to calculate the VAT auto calculation using the 15% rate from tax periods or months commencing 1 May 2025,” added the directive from SARS.

He added that vendors who have already implemented both the rate changes and the Zero-Rating are encouraged to reverse those changes before 1 May 2025.

Kieswetter said that he understands the complexity and the confusion that has resulted from this process. SARS will do its best to provide further clarity to create certainty of obligation for all vendors.