VAT registration threshold is internationally competitive, says Godongwana

Contributing sentiments towards policy:

61% : The turnover tax system is aimed at simplifying tax compliance for small businesses by replacing income tax, VAT, provisional tax and capital gains tax.
57% : For example, administrative benefits for businesses and tax administrations are often advanced to justify a higher threshold.
55% : He pointed out that the VAT compulsory registration threshold increased to R1m in 2008 (when the law was passed) as a packaged approach, together with the implementation of an elective presumptive turnover tax system for very small businesses with a turnover up to R1m a year.
55% : Godongwana noted that according to the Sars 2024 Tax Statistics publication, for the 2023/24 financial year, 53% of vendors had a turnover of R1m or less, which is below the mandatory VAT registration threshold, illustrating that many vendors register for VAT on a voluntary basis.
54% : But the minister cautioned that changing the threshold could have a significant impact on the tax base and tax revenue, and needs to be carefully considered.
51% : "Therefore, vendors with an annual turnover below the R2m threshold cumulatively represented a total domestic VAT payment of R52.6bn and VAT refunds of R23.4bn with a net VAT of R29.2bn." According to Tax Statistics 2024, net VAT collections in 2023/24 amounted to R447.6bn after refunds of R342.9bn, with domestic VAT contributing R525.4bn.
39% : "On the other hand, too high a threshold may result in a large portion of businesses remaining outside of the tax net, where they would then face a significant financial shock as they go above the threshold.

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