Budget 2022

Government to make three items VAT exempt in 2019

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Government will zero-rate white bread flour, cake flour and sanitary pads from April 1 next year. 

The announcement was made by new Finance Minister Tito Mboweni on Wednesday while delivering the medium-term budget policy statement. 

This comes after a panel of experts was commissioned earlier in the year to investigate whether the state should add any additional items to its basket of goods that are VAT exempt. 

In the February budget, then Minister of Finance Malusi Gigaba announced that the VAT rate would increase by one percentage point from 14% to 15% to boost government revenue.

A panel was then set up to investigate measures to mitigate the tax increase on low-income households. The panel recommended that six items be zero-rated. 

The revenue cost from zero-rating these items is estimated to be R1.2bn. “Zero-rating these products target low-income households and restores the dignity of our people,” Mboweni said during his address. 

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