South African businesses registered for VAT face new compliance requirements following the release of Binding General Ruling 16 (Issue 3) by the South African Revenue Service (SARS). The updated ruling, published on 27 November 2023, applies to financial years starting from 1 January 2024 and replaces the previous version.

A key change is the introduction of a compulsory “true-up” adjustment. Vendors using the prior year’s turnover to determine their apportionment ratio must now reconcile provisional and final figures within nine months of year-end. This adjustment must be included in the month eight VAT return. For example, companies with a December 2024 year-end will need to declare the adjustment in their August 2025 return, due by the end of September.

In addition, vendors are required to submit detailed apportionment information directly to SARS at the time of filing. The report must include the vendor’s name, VAT number, apportionment method, and annual ratio. Those applying the new formula for the first time must also provide ratios and methods from the previous three years.

Tax experts caution that these measures significantly raise compliance demands, especially for smaller businesses or those with mixed taxable and exempt supplies. Errors or omissions could trigger penalties.

ENS Africa, the law firm highlighting the changes, advised vendors to keep thorough records and seek professional guidance. The first mandatory submissions under the new rules will be due in September 2025.

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