VAT Fever hits consumers

MBABANE – In a bid to delay and minimise the effects of the Value Added Tax (VAT), customers were buying groceries in large stocks last week.

Shops like the Spar, Pick n Pay and Shoprite were flooded with people who were buying groceries in bulk on Wednesday and on Friday.

The VAT will be introduced tomorrow in replacement of the sales tax, which the country is familiar with.

The difference between the VAT and sales taxes is that the VAT digs into the consumer’s pocket and benefits the business while sales tax benefits the consumer and has an effect on the service provider.

The Consumer Link crew took some time to watch what was happening in shops around town on Thursday.

Interviews conducted reflected that while most people are buying in large amounts to temporarily ease the pinch, some are relaxed and have grown to accept the change.

Some believe that there is no way one could evade the tax because it is here to stay and touches on commodities that people need on a regular basis.

She was at Pick n Pay to buy foodstuffs. She said she stocks most of the vegetables she uses in her business from Swazi farmers. "I come to these shops for things like salt," she said.

Dlamini said they decided to buy several bags of rice because they knew by the time they needed them for the wedding the prices would have gone higher.

"We are just delaying; at least we got some of the things to use for the wedding while they were still cheaper."

He said, "I do my normal shopping around this time of the month.

I don’t think there is anything I can do to avoid the tax because it has already been introduced."

He said he would definitely feel the pinch as most of the things he bought regularly were taxable.

Some said, "Even if one can buy food items for E10 000 they will get finished and we will have to go back to the shop.

It is just unpreparedness and denial that is making people rush to buy groceries ahead of the VAT introduction."

VAT in a nutshell

VAT is a tax on the transfer of goods and services that ultimately is borne by the consumer. Highly visible, it will increase the cost of just about everything, from a carton of eggs to a visit to the lawyer.

It is also hugely regressive, falling heavily on the poor.

But VAT advocates say those negatives could be offset by using the proceeds to pay for health care for every person — a tangible benefit that will be highly valuable to low-income families.

VAT is an indirect system of taxation (which means it is not deducted from your income) that is currently levied at 14 per cent on the value of all goods and services supplied by vendors.　

It doesn’t matter if the supply of the goods is of a capital or trading nature.

The VAT system is not as complicated as it may seem. It works like this:

l You buy goods from your supplier. The price will include VAT.

l You sell these goods to your customer, charging VAT on the goods sold.

l The difference between the VAT you paid and the VAT you have collected, you will pay/ claim to/from the Receiver of Revenue according to the VAT cycles.

VAT is levied on the value of the goods or services - whether by sale, rental agreement, instalment credit agreement and all other forms of supply.　Where supply between unconnected parties is done at no cost, no VAT is charged.

For any sale of more than E50, you have to issue a tax invoice, with the word ‘tax invoice’ printed on it.

This is the most important document in the VAT system, so make sure you get it right. The invoice must contain:

l The value of the goods/ services excluding VAT.

l The VAT.

l The value of the goods/ services including VAT.

l The name, address and VAT registration number of the person buying the goods/services.

l And your own name, address and VAT registration number.

　

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