VAT Hike Scrapped – But What Happens to the Zero-Rated Offal Meat?
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The planned increase in South Africa’s VAT rate, set to take effect on 1 May 2025, has officially been withdrawn. Both the South African Revenue Service (SARS) and National Treasury have confirmed that the rate hike is no longer on the table.
The withdrawal has created uncertainty around another measure announced at the same time, including the extension of the zero-rated food items list. This list included edible offal from sheep, poultry, goats, swine, and bovine animals (including cuts such as heads, feet, bones, and tongues), dairy liquid blends, and tinned or canned vegetables.
👀Will Zero-Rated Items Stay?
These zero-rated items were originally introduced as part of a package aimed at cushioning low-income households from the anticipated impact of the VAT rate increase. Now that the increase has been shelved, the question is whether the zero-rating of these additional items will also disappear.
While no formal public statement has directly confirmed the zero-rating withdrawal, guidance from the National Treasury and SARS strongly indicates this.
According to National Treasury:
“The decision not to increase VAT means that the measures to cushion lower income households against the potential negative impact of the rate increase now need to be withdrawn and other expenditure decisions revisited. To offset the unavoidable expenditure adjustments, any additional revenue collected by SARS may be considered for this purpose going forward.”
SARS also advised as follows:
“Vendors who have already implemented both the rate changes and the Zero-Rating are encouraged to reverse those changes before 1 May 2025.”
These statements suggest that the zero-rating was directly linked to the VAT rate increase and was not intended to operate independently. With the VAT hike no longer proceeding, the additional zero-rated items should be reversed.
🧾The Impact on Accountants and Clients
Accountants and tax practitioners should advise affected clients, especially in the food, retail, and wholesale sectors, to review any system changes or pricing adjustments implemented in anticipation of the zero-rating. VAT returns and invoicing practices should be reassessed to ensure compliance from 1 May 2025.
Where systems have already been updated, the reversal should be effected before the implementation date to avoid non-compliance or errors in reporting.