Recommendations on Zero Ratings in the Value-Added Tax System

The Independent Panel for the Review of Zero Rating in South Africa has submitted Recommendations on Zero Ratings in the Value-Added Tax System to the Minister of Finance. "The Panel assessed its proposals in terms of their projected effects on five main outcomes. 1. The overall tax system must remain as progressive as possible. 2. The extent to which VAT could become more progressive. 3. Zero rating should incentivise merit goods and address special needs for women, older people, those living with disabilities and children if possible. 4. The cost of zero rating to the fiscus should not be excessively high. 5. The benefits of zero rating should not be absorbed by producers or retailers.

Based on its analysis, the Panel recommends that the following items are zero rated: 1. White bread 2. White flour 3. Cake flour 4. Sanitary products, combined with the free provision of sanitary products to women and girls. 5. School uniforms, subject to further investigation to clearly demarcate school uniforms. 6. Nappies."