Recent rumors that existing contracts such as cell phones and motor vehicle loans will not be affected are nothing more than wishful thinking. Perhaps even a ploy for April Fools….

The fact of the matter is that VAT cannot be avoided or controlled by a contract. VAT is an inclusive rate of tax and cannot be limited, capped or avoided by any contract. If that was the case, Treasury would have a very difficult time controlling revenue collections.

VAT is charged all over the place

Your lights and water account has VAT charged on all services including rates and taxes. Your DSTV, internet and armed response companies are also affected. In fact every service and product that you purchase will be affected.

Investments yields are affected

Your returns on your investments are affected by the increase in VAT. Admin fees, advisor and fund manager fees are all subject to VAT. These fees are deducted from your returns and the net amount is yours. So your rate of return on investments including pension funds will be reduced.

So the hike in VAT is unavoidable and cannot be averted. We all will be affected in more ways than we realise and no existing contracts can avert the increase.