Parliament adopts tax amendment bill

Lerato Maleke | Tuesday December 16, 2014 19:34

When presenting the bill, the Finance and Development Planning minister Kenneth Matambo said that the VAT threshold for registration purposes would be increased to relieve small taxpayers the burden of regularly filing VAT returns.

Matambo further said farming equipment, which was currently zero-rated, would be exempted from VAT. He also said the amendments are geared towards the simplification and administration of the tax laws as well as to encourage compliance.

The salient provisions of the bill are, Clause two, which sought to amend section 16 of the VAT Act, in order to provide a minimum annual turnover threshold of P500,000 for taxpayers to qualify to be voluntarily registered for VAT. The Act does not provide any threshold, which has to be reached for taxpayers to qualify for voluntary registration.  

The minister said the adoption of such a tax reform would clean the VAT system by excluding small taxpayers who are currently registered, but are not able to comply, thus simplifying the tax administration and relieving such taxpayers of the burden of periodic filing of VAT returns.

Clause three, seeks to amend the first schedule to extend the list of zero rated supplies and the proposed list of items to be added include brown bread, vegetables, fruits, rice, samp, milk and bread flour. Matambo said this was also an effort to encourage consumption of healthy meals.

Clause four of the bill sought to amend the second schedule by making supplies of tractors used for farming to be exempt from VAT. He said this meant that the supply of tractors used for farming was added to the list of exempt supplies.

Clause five sought to amend the fifth schedule by increasing the mandatory threshold for VAT registration from the current turnover of P500,000, to P1 million. The increase of a million is an effort to simplify the tax system according to the minister.