Guidelines for a simplified Value-Added Tax Act

Abstract

Purpose: The goal of the study is to provide guidelines for a simplified South African Value-Added Tax (VAT) Act.

Motivation: The current VAT Act lacks logical structure and is therefore complex to teach, apply in practice and administer. The study on which this article reports investigated the structure of the VAT Act as an element of legal complexity.

Design/Methodology/Approach: The research was conducted in two phases: a literature review, followed by semi-structured interviews.

Main findings: Existing empirical studies confirm that the poor structure, layout and organisation of the VAT Act contribute to its complexity. In addition, research confirms that improvements to structure, layout and organisation enhance the readability of statutes. Interviewees agreed that the current incoherent structure of the VAT Act contributes to its complexity. The findings confirm that the complexity of the VAT Act raises compliance and administrative costs.

Practical implications/Managerial impact: The literature review and interview findings contribute to the development of guidelines for a simplified South African VAT Act, which is the contribution of this study. The principles include adhering to a VAT vendor’s lifecycle, grouping sections together, introducing headings and subheadings, using clear signposting, employing international benchmarks and seeking a solution that addresses local challenges most effectively.

Novelty/Contribution: One recommendation that stands out is to completely rewrite the VAT Act. As a first step in this rewrite project, it is recommended that an index be developed using the guidelines. This is an initial step towards simplification of the South African VAT Act.

Keywords:

• complexity
• incoherent
• structure
• layout
• value-added tax
• design

Acknowledgements

Gratitude is expressed to:

• the National Treasury for granting permission to interview staff;

• SARS for granting permission to interview staff;

• the SAIT for granting permission to interview members of the VAT Committee; and

• SAICA for granting permission to interview members of the VAT Sub-committee.

Declaration

This article is derived from the following doctoral thesis:

Hassan, M. E. (2023). A framework for a simpler Value-Added Tax Act [Doctoral thesis]. University of Johannesburg. Link: Awaiting publication

Disclosure statement

No potential conflict of interest was reported by the authors.

Ethical clearance

Prior to collecting primary data and conducting semi-structured interviews, the University of Johannesburg, School of Accounting Research Ethics Committee granted ethical approval [Ethical clearance code: SAREC20220414/03].