A critical analysis of the VAT Act amendments relevant to South African municipalities

Abstract

The purpose of the study was two-fold: firstly to perform a critical analysis of the VAT amendments, relevant to municipalities as introduced by the Small Business Amnesty and Amendment of Taxation Laws Act No. 9 of 2006 with effect from 1 July 2006. Secondly, to perform exploratory practical research by means of a custom-designed questionnaire. The aim of the questionnaire was to assess whether or not the potential problems, as identified by the critical analysis, may be prevalent in practice. Six municipalities, mostly metropolitan (metros) provided their responses to this questionnaire. The study has indicated that the VAT amendments and transitional provisions were generally well received by municipalities. However, there appears to be an indication that the training on the VAT amendments received by municipalities may not have been effective. This may be an area for consideration for future taxation laws amendment and implementation process. Moreover, the initial cost, effort and time required by the taxpayers to implement the VAT amendments has shown to be onerous. Further research is needed to establish whether or not the VAT amendments will continue to be beneficial to the municipalities in the upcoming fiscal-years. Copyright