CAPE TOWN - South Africa will see a 1% value added tax (VAT) increase, effective April 1, 2018.
Although the VAT hike will take its toll on consumer's pockets, there are other countries who have a higher VAT rate than SA. Take a look at what other countries are paying for VAT.
Former Finance Minister Malusi Gigaba said that South Africa’s VAT increase was unavoidable and the increase is expected to generate much needed revenue of almost R23bn.
He said personal income tax has been increased significantly in recent years, particularly in higher income bands, and the corporate income tax rate is high by international standards.
In contrast, the VAT rate has not been adjusted since 1993 and is low compared to some of the country’s peers.
“The current zero-rating of basic food items such a maize meal, brown bread, dried beans and rice will limit the impact on the poorest households,” he said.
Meanwhile, these 10 countries pay more VAT than SA:
1.Argentina
File image: Argentina flag. (Reuters).
The South American country has a VAT rate of 21%, according to a 2016 Taxation and Investment report by Deloitte as well as global online resource for tax news site, Avalara VAT live.
2.Brazil
File image: Brazil flag. IOL.
The largest country in South America and Latin America has a VAT rate of between 7% and 25%, according to Avalara VAT live. Brazil’s tax system is considered complex as it incorporates movement of goods tax which is ICMS, municipal tax on services which is ISS, tax on manufactured goods which is IPI and federal tax contribution which is COFINS.
3.Chile
File image: Santiago de Chile, or simply Santiago, is one of the largest cities in the America. IOL.
The South American country’s VAT rate is 19%, according to a 2017 VAT chart Columbia.
4.Denmark
File image: The Nyhavn canal, part of the Copenhagen, Denmark, Harbor. Reuters.
The European country has a VAT rate of 25%, according to tax and auditing firm, Pricewaterhousecoopers (PwC’s) 2016 VAT report in Denmark.
5.Gabon
File image: Libreville, Gabon. Reuters.
The central african country has a VAT rate of 18%, according to economic indicator site, Trading Economics.
6.Malta
File image: Malta. IOL.
The European country has a VAT rate of 18%, according to financial sector in Malta site, Finance Malta.
7.Russia
File image: Red Square in Moscow, Russia. Independent UK.
Russia, situated on the borders of Asia and Europe has a VAT rate of 18%, according to Avalara VAT live.
8.United Kingdom
File image: The Brandenburg Gate, Berlin. IOL.
The European country has a VAT rate of 20%, according to Avalara VAT live.
9.Spain
File image: Madrid, Spain. IOL.
Spain has a standard VAT rate of 21%, according to Avalara VAT live.
10.Romania
File image: Romania flag. Reuters.
Romania in the Balkans has a VAT rate of 18%, according to Avalara VAT live.
READ ALSO: #Budget2018: Gigaba says VAT increase was unavoidable
Meanwhile, The Mercury on Sunday reported that nearly 40 000 people signed a petition to get parliament to scrap the VAT increase.
The petition on advocacy organisation’s Amandla.mobi’s website, rejects former finance Minister Malusi Gigaba’s announcement of a 1% VAT increase.
The petition is endorsed by 36 civil society organisations which believe there are other ways of raising revenue rather than increasing VAT which will “hit the poorest the hardest.”
Thami Bolani, chairman of the National Consumer Forum (NCF) said the increase was not fair on consumers.
"We are where we are because of a government which is bloated, poor service delivery, corruption, and money lost to state capture. We are where we are simply because the finances of the country are not properly managed,” he said.