Adapting to VAT Updates: Municipal Impacts

In this episode of Business Engineering’s !Engage Connected Communities Podcast, host Philip de Bruin and guest Cornel Ebersohn, a Phoenix ERP system implementation specialist, discuss the upcoming VAT rate change from 15% to 15.5% effective May 1, 2025, and its implications for local government. They explore vendor requirements to ensure system readiness, specific VAT rate rules based on the timing of supply and delivery, and changes to VAT 201 returns to accommodate different supply periods. Key challenges include managing prepaid electricity accruals to avoid financial losses for municipalities, with a focus on accurate rate application (15% before May 1, 15.5% after). They also address handling standing orders and annual contracts during the transition, emphasizing the need to review orders for budget impacts and potential reissuing to comply with the new rate, ensuring municipalities mitigate risks and maintain financial stability.