VAT is a money machine for big government in Japan

LONDON, ENGLAND - JANUARY 03:  Shoppers pass a...

For years, I’ve been warning that a value-added tax (VAT) would be a terrible idea. Simply stated, politicians would have no reason to control spending or reform entitlements if they had a new source of tax revenue.

In this video, I explain why this European-style national sales tax is a money machine for bigger government.

via Just as Happened in Europe, the VAT Is Becoming a Money Machine for Big Govenrment in Japan « International Liberty.

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Small business owners innovate to stay ahead

PARIS, FRANCE - JUNE 22:  Junior Minister for ...

Small business owners are increasingly diversifying and innovating as they look to capitalise on the busy summer of events in the UK and improve their bottom line, according to Avivas bi-annual SME Pulse.

The numbers of SMEs putting on sales and discounts, diversifying into new areas or reducing overall prices have all increased in the last six months, with the desire to capitalise on the busy summer of sporting and other events likely to be one reason for this.

via Small business owners innovate to stay ahead in tough environment | Easier.

SA business owners look and learn.

VAT replacing business tax

Shanghai Skyline

Beijing is likely to be the second city in China after Shanghai to start levying value-added tax (VAT) on transport and certain modern service industries on September 1, the US auditor Ernst & Young (E&Y) said in Beijing Thursday, citing an insider who participated in the municipal policymaking.

The State Council said Wednesday that it would expand the pilot reform of replacing business tax with VAT at an additional 10 areas between August 1 and the end of the year, as part of the government’s efforts in structural tax reduction.

The 10 places include Beijing, Tianjin municipalities, Jiangsu, Zhejiang, Anhui, Fujian, Hubei and Guangdong provinces, as well as the cities of Xiamen and Shenzhen, the Xinhua News Agency reported Wednesday, citing a State Council decision.

E&Y predicted that because of a lack of infrastructure, only Beijing, Tianjin and Jiangsu and Anhui provinces would be able to complete such a reform by the end of the year, with Beijing being the first among the 10 places.

The local governments “would not initiate a pilot program if they’re not ready. There can easily be over 100,000 enterprises included in a (VAT) trial in Shanghai or Beijing. Without (deployment of) VAT-control invoice machines, these enterprises wouldn’t know what to do (with the trial),” said Liang Yinle, a partner at E&Y, who has advised the State Council on VAT reform.

Because of the complexity of VAT, Liang said in Shanghai’s case, the local government carried out massive training for the companies. Meanwhile, the VAT reform involves transferring taxation from local taxation bureaus to the local offices of the State Administration of Taxation, which needs time to coordinate, he said.

“Shanghai was the first city to try the VAT reform, where the business tax has been substituted by VAT with an 11-percent VAT rate on the transport sector and a 6-percent rate on the modern service industry,” Xinhua reported.

Liang noted that the VAT reform would not stoke up inflation as it currently focuses on the business-to-business sectors, and it could lower firms’ tax burdens in production because it avoids cascading effect of taxes, or tax on tax levy.

By the end of March, 129,000 companies in Shanghai had participated in the VAT reform, and the tax burden for the involved small firms was cut by about 40 percent, Shanghai-based eastday.com reported in May.

But the companies may get to pay more taxes on their increased profits, as VAT reduces the costs of production and eliminates the room for them to hide profits illegally, Liang said.

via VAT pilot rollout may be delayed – People’s Daily Online.

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Can you claim VAT back on materials used for accommodation?

English: solar thermal thermosyphon water heat...

We have workers who are collected on Monday mornings and dropped off in Bonnievale on Friday afternoons. As we are a working farm and 30Km away from Bonnievale we have to supply accommodation for the workers whilst they are at work. This is normal.We have built a new workers cottage, re-conditioned one cottage and built a flushing toilet, shower and wash-up area. Installed solar heating and lighting, and cooking facilities.We have claimed VAT on the materials used and Sars say that as we are not charging rental and paying VAT over to them we cannot claim the VAT back on materials.My husbands auditor in Durban said we are entitled to claim the VAT back and my accountants in Dbn say we are not allowed to?What is our position?Sars have said if I give them the Act that covers the VAT that can be claimed then they will accept that. So I have to do their work.Please could you help us on this?

Response by Muneer Hassan CASA, project director, Saica StandardsI had a look at section 12cii and agree that this is an exempt supply hence no input tax can be claimed on direct attribution method.

via Moneywebtax – Can you claim VAT back on materials used for accommodation? – Integritax.

Sars nails security boss for R2.2m

border|22x20px South Africa, Durban beach

A former Durban police detective, who now owns a security company, is facing a tax fraud, alternatively tax evasion, charge for just over R2.2 million after a company audit by the SA Receiver of Revenue.

Sandile Nkabinde, 37, who is now wheelchair-bound, appeared briefly in the Durban Magistrate’s Court on Wednesday. Nkabinde and his close corporation, Inside Edge, which trades under the name Sandile Security Services, have been charged for tax fraud.

According to the charge sheet, Nkabinde is listed as the sole member of the company that is registered as a value-added tax vendor. The state alleges that Nkabinde intended to defraud Sars by submitting false VAT returns on behalf of his company for the period June 2006 to February 2010, causing Sars to suffer a prejudice of just over R2.2 million.

The security company had a contract with the Mangosuthu University of Technology, in Umlazi, during this time.

According to Nkabinde’s LinkedIn profile, he was a detective with the South African Police for 11 years. During this time as a detective, it said, he led a team of detectives that was responsible for investigating police killings in Durban. He was also part of a team that investigated the political killings in Richmond.

His company was listed as providing a service to various government departments, specialising in physical guarding, special events, bodyguarding, skilled investigators and includes former guerrilla freedom fighters.

Nkabinde is also listed as being a chairman of a non-governmental organisation that helps raise funds for paraplegics and quadraplegics.

State advocate Selvan Govender requested an adjournment for representations to be made, and Nkabinde will again appear on February 28.

via Sars nails security boss for R2.2m – Daily News | News | IOL.co.za.

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I don’t mind paying tax. It’s what I owe.

The Taxman

So, even though I am looking at a R9 000 tax bill (eish!) I somehow don’t mind. It’s what I owe. It’s my duty to pay it.

And at least Sars said thank you. For that, it gets an Orchid from me.

via Taxman tops the pile while Telkom simply torments us – Saturday Star

Turnover Tax is dangerous for small business

People filing tax forms in 1920

DON’T BE FOOLED!

Warning: New Turnover Tax from SARS could be SARS’s way of ripping you off!

Remember the saying: When it sounds too good to be true, it probably is!

Why would SARS offer you a New Tax System if they were going to make less money?

Of course they are going to make more money out of Turnover Tax!

And this is how they are going to do it:

They are going to try convince thousands of young small businesses to give up their virtual NO TAX status for one in which they could be liable to pay up to R38 000 EXTRA TAX EACH YEAR!

The only reason SARS can give is that you may need to fill in 7 or so less TAX FORMS!

But who cares?

For R38 000 I’ll fill in 20 extra tax forms!

Example:

Current system:

Small CC business turning over R999 999 per year

has no profit after expenses and member draws salary of R200 000 and pays R33 430 on salary

R33 430 is the ONLY TAX this business pays

Turnover Tax system:

Small CC business turning over R999 999 per year

has no profit after expenses and member draws salary of R200 000 and pays R33 430 on salary

R33 430 PLUS R37 930 TURNOVER TAX =

R71 360 is the TOTAL TAX this business pays!!

Now please, where is the benefit in that?

Turnover Tax is a SCAM – A scam from the heart of government, trying to rob the struggling, poor man in the street and having the cheek to ask him to thank them for it!!

Our advice: Don’t touch turnover tax with a barge pole.

Government should be sent away ashamed of itself for such brazen greed and deception with its tail between its legs, to go think up some other scam to throw at the rich for a change…

Small businesspeople are going to have to do their calculations VERY carefully before jumping into the turnover tax system boots and all!

Comment: info@turnovertax.co.za

via Turnover Tax is dangerous for small business

Keep your tax payments uptodate

President's Advisory Panel for Federal Tax Reform

Image via Wikipedia

The  South African Revenue Service (SARS) has extensive powers to collect tax. These powers are contained in various tax laws and are intended to facilitate the prompt collection of tax that is due. There have been a number of court cases dealing with the limitations of SARS’ collection powers.

The Western Cape High Court recently gave judgment in a case dealing with SARS’ collections powers. The case related to a judgment obtained by SARS against Fastmould Specialist CC in respect of Value-Added Tax (VAT) and employees’ tax. The VAT Act and the Income Tax Act both contain provisions allowing SARS to obtain judgments against taxpayers by filing a statement with the clerk or registrar of any competent court. The taxpayer is not afforded an opportunity to oppose the granting of the judgment.

via Court affirms SARS’ power to collect tax

Common SMEs tax mistakes


Tax nightmares among owner-managed businesses and SMEs are costly and time consuming, particularly relating to tax queries and disputes with the South African Revenue Services (Sars).

By simply implementing key preventative administrative steps, business owners can actively avoid or at least reduce the risk of these tax mistakes from arising.

Inaccurate accounting information Mistake

The accuracy of the underlying accounting information and supporting documentation  is directly responsible for the integrity of a taxpayer‘s income tax return.  In the case of SMEs, this integrity is often queried as a result of a lean accounting function and  confusion in distinguishing  between the financial affairs of the business owner and the business.

Sars tax auditors are first and foremost focused on testing the reliability of accounting books and records, by, for example, reviewing cash accounting records for unusually large or ad hoc payments, on the basis that these often represent private expenses which have been processed as business expenses and  claimed for tax purposes.

The importance of accurate accounting information and supporting documentation is further compounded by tax regulations requiring taxpayers to maintain proof of all income and expenditure as well as maintaining  business documentation in a particular format, for example,   VAT invoices.

via Moneywebtax – Common SMEs tax mistakes – PAYE and SITE.