The uncertainty around proposed VAT changes, and its subsequent reversal, does create an opportunity to talk about VAT and what it means for establishments in South Africa. It’s never fun to think or talk about taxes, but paying taxes means you’re earning income, and that’s a good sign.
What are the VAT Changes
Should VAT change again, it’s also worth documenting where changes were required. Considering these points helps you be as prepared as possible and highlights the importance of integrating technology that does the bulk of the heavy lifting for you.
Let’s break it down in plain terms,
7 points to consider.
- Update Pricing. Consider how you want to adjust your pricing to add on the new VAT rate. Do any of your sales brochures, menus or rate sheets mention VAT? Depending on what level is eventually proposed (or not) not everyone is going to modify their pricing, but if you are, then it’s a good idea to decide now how you will handle it. At NightsBridge, we will guide you through the necessary checks to ensure compliance, and switching over will be a straightforward process.
- Communicate with Guests. Inform your guests about the change in VAT and how it might affect their bookings, especially if you’ve already quoted prices or taken bookings for dates. Transparency builds trust and helps manage expectations. READ: Expert Tips to make your guest reviews work harder for you
- Review Contracts and Agreements. Check whether the VAT increase affects the pricing if you have long-term bookings or agreements. Update those terms if necessary. From within NightsBridge, by using our systems, we will do a lot of the heavy-lifting for you, but on your side, you need to check your compliance.
- Update Accounting Systems. External accounting software or systems generally auto-update to correctly calculate the new VAT rate if your region is set to South Africa. However, given how late the reversal happened in April, if your accounting system did not notify you, it is worth checking up on that. Doing this helps you stay compliant and avoid errors that are often more expensive to fix than to avoid. READ: NightsBridge integrates with Xero
- Different Tax Time Frames. Things can get tricky when you’ve taken a deposit before VAT is imposed, but the guest only stays after that date. In most cases, VAT applies when the service is delivered (meaning when your guest is at your property). If your VAT returns are based on when money goes into your account, this may not affect you differently. If a refund becomes applicable, the timing becomes more important.
- Train Staff. If you have employees handling bookings or finances, make sure they understand the changes and how to apply the new VAT rate. It is always helpful to be hypervigilant over the next couple of months to also check those processes.
- Consult a Tax Professional. If you’re unsure how the VAT increase impacts your business or how to claim back the VAT you pay against the VAT you charge, it is essential to seek advice from a tax consultant or accountant. They can provide tailored guidance based on whether you are near the tax threshold. This is another budget point being debated, so stay tuned.
In the meantime, as a NightsBridge client, keep an eye on your inbox for additional help from NightsBridge. We will guide you through the changes in your software, where applicable.