Sanitary products, nappies and more: Treasury announces new VAT zero-rated items

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It’s now been a good few months since former Finance Minister Malusi Gigaba announced that there would be an increase in Value Added Tax (VAT) from 14% to 15%.  With national outcry quickly circulating his presidency, Cyril Ramaphosa promised that an independent panel would review the list of zero-rated items. Now, National Treasury and the panel have presented their findings.

VAT zero-rated products: Sanitary products and white bread

On Friday, Minister of Finance Nhlanhla Nene released the report by the independent panel on the review of the current zero-rated items.

The Minister appointed the panel after the announcement in the budget in February of the increase in the rate of VAT from 14 to 15 per cent effective from 1 April 2018.

The panel submitted its completed report to the Minister on Monday, 6 August 2018.

Read – Nhlanhla Nene: government needs R48bn for Ramaphosa stimulus package

According to the report, the panel recommended four new categories of products to be added to the zero-rated list. Some were more specific than others.

White bread, bread flour and cake flour look set to be added together with the highly requested sanitary products. School uniforms have also been put forward.

The final addition will be nappies (soft and cloth) and both baby and child variations.

In a statement with the announcement, Treasury explained that the panel also recommended that government expedite “the provision of free sanitary products to the poor” and that the zero-rating of school uniforms only be done “if they can be separated from general clothing”.

“For each of the recommended items, the panel suggests that National Treasury does further work to ‘ensure that the benefits of zero-rating accrue to consumers and are not captured by producers’.”

The report also references programmes “on the expenditure side” to assist poor households. These include strengthening the National School Nutrition Programme as well as increasing the child support grant and old age pension.

The recommendations are now open to public comment until 31 August. Minister Nene will then decide which recommendations to move forward with before taking final decisions.

Submissions can be made in writing and sent to vatsubmissions@treasury.gov.za

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