SsnippetsSERVE AND
SsnippetsSERVE AND DELIVERSUMMIT ADDRESSES MUNICIPAL CHALLENGESThe Department of Local Government (DLG) hosted an important Shared ServicesSummit, which brought together municipal leaders and experts from acrossthe province and national level to discuss solutions for the challenges facedby municipalities. The department has been working to develop Shared Servicemodels that will help municipalities improve their servicedelivery. By sharing resources and expertise, municipalities candeliver better services while reducing costs. This initiative hasalready led to better compliance and improved service deliveryin various districts.With tight budgets and limited resources, many municipalitiesare increasingly turning to shared services as a solution to domore with less. The summit provided a valuable opportunity toexplore how these shared services can be used more effectivelyand on a larger scale to improve local service delivery.“The Shared Services Summit is a chance for municipalities to come together,share ideas and collaborate on how to work better together to serve theircommunities,” said Dr Sandra Greyling, chief director: municipal performancemonitoring and support at the Department of Local Government. “Our goal is tohelp municipalities save money, improve efficiency anddeliver the services that communities need in a morecost-effective way.”Merle Green, Shared Service project manager saidthat the summit focused on how municipalities canstandardise, consolidate and enhance services sothat they are more accessible to a wider range ofmunicipalities, even with limited budgets. Shared servicescan help municipalities save money, work more efficientlyand offer better services to their communities.PARTNERING IS THE WAY FORWARD FOR SASouth Africa is grappling with major challenges such as unreliable water andelectricity supply and ageing infrastructure, resulting in some municipalities fallingshort on service delivery and being placed under administration. The impact ofthese challenges on the economy has been profound, stifling growth, hamperinginvestment and exacerbating inequality.Public-Private Partnerships (PPPs) must be encouraged to help government fasttrackits goals of creating robust infrastructure and first-class service delivery. Oneof the benefits that PPPs offer government is the ability to access private fundingquickly due to the relative lack of bureaucracy in terms of allocating investments.PPPs unlock funding for local municipalities as an increasing number of privatesector companies become involved in the municipalities where they operate.PPPs must also involve civil society. One of the major shifts that happened withthe advent of democracy 30 years ago is that everything related to infrastructuredevelopment has been left to government, with civil society choosing not to get involved.B20 HIGHLIGHTS NEED FOR DIGITAL ECONOMY SKILLSLeading professionals at the Business 20(B20) summit, the official G20 dialogueforum with the global business community,recently outlined how South Africa canachieve a future-ready economy.Sanlam CEO Paul Hanratty spoke abouthow the education and employmenttask force was addressing the changethat technology had brought to the jobenvironment. “We have to look at theinterventions that need to take place,”said Hanratty. One of these interventions,he suggested, was bringing down the costof data.Hanratty pointed out that while countries such as Japan, China and SouthKorea faced declining populations, Africa and South Africa were seeing strongpopulation growth.“At the end of the day, it’s about economics, and when the costs reduce farenough. If you think about AI, there is nothing new about AI today that we werenot doing 20 or 30 years ago. What has changed is the cost of data storage andthe CPU processing. We’ve got to make people resilient. And it starts right at thebeginning, early childhood, giving people the right foundations, because the worldchanges so quickly,” noted Hanratty.Focus pointsToyota CEO, Andrew Kirby, reflected that SouthAfrica was “becoming weak in science and maths.We need a lot more support for robotics andtechnology education, especially on the continent.”Key takeaways on how the B20’s industrialisationand innovation task force can help, include:• Creating an environment that stimulates research,development and entrepreneurship, especiallyaround green technology.• Focusing on developing policies and regulationsthat enable access to capital and financing forentrepreneurs and innovators.•Advocating investments in Stem (science, technology, engineering andmaths) education and skills development to build a pipeline of talent forindustrialisation.• Promoting initiatives that support women and underrepresented groupsin entrepreneurship.• Fostering collaboration between industry, academia and government to driveresearch, development and commercialisation of new technologies.• Addressing barriers that hinder inclusive participation in activities.By Neesa MoodleyCourtesy of Daily Maverick8 | Service magazine
snippetsSVAT RATE INCREASEThe 2025 Budget tabled by Finance MinisterEnoch Godongwana (12 March 2025) saw the2% VAT increase proposed in February2025 replaced by two consecutive 0.5%increases, bringing the VAT rate to 16% inthe 2026/2027 financial year. The first 0.5%will be effective from 1 May 2025. Why thegovernment has opted for a staggeredincrease is up for debate. Beyond the clearneed to raise revenue, it may be to ensureconsumer behaviour is not too adverselyaffected by the increase in VAT, with 0.5%making less of an impact financially onconsumers, versus 1%.It could also be a negotiating positiongiven the political resistance any increasein VAT is likely to face, with a single 0.5%increase possibly where all parties mayland in exchange for concessions.SUBJECTED SUPPLIESSpecific time of supply rules apply to, interalia, supplies between connected persons(such as a group of companies), creditagreements subject to the National CreditAct, rental agreements, constructionrelatedsupplies of goods/services, theprogressive or periodic supply of goods,instalment credit agreements, fringebenefits and leasehold improvements. Allthese special time of supply rules must beconsidered in conjunction with the specialrules that apply when VAT is increased(or decreased).Section 67A of the VAT Act providesthat in these circumstances, the “old”rate of 15% will continue to apply to thegoods/services performed prior to 1 May2025, notwithstanding that thosesupplies are in terms of section 9 deemedto take place after 1 May 2025. Section67A requires a “fair and reasonableapportionment” of the consideration forthe supply that straddles the increasedate. This rule applies specifically torental agreements, periodic or progressivesupplies and construction-related suppliesof goods/services.EXISTING AGREEMENTSThe VAT that a vendor is required toaccount for on its supplies (output tax) isrecoverable from the recipients of thosesupplies if there is a contractual rightto recover such VAT. There is no generallegislative right of recovery, exceptwhere there is a change in the rate ofVAT or fraud or misrepresentation by therecipient. However, section 67 of the VATAct provides that where the rate of VATis increased (or decreased) in respect ofa supply of goods/services in relation towhich “any agreement is entered into bythe acceptance of an offer made beforethe tax was increased”, the vendor mayrecover such additional tax “as an additionto the amount payable by the recipientto the vendor”. The vendor may not relyon the provisions of section 67 if thereis a written agreement to the contrary,that is, the written agreement specificallyprovides that the vendor may not recoverany increase in the VAT rate.BAD DEBTSA vendor can claim VAT relief where a debtrelating to a taxable supply in respectof which the vendor has accounted foroutput tax is treated as “irrecoverable”.The vendor may have accounted for VATat 15% in respect of a supply that was madebefore 1 May 2025, but the considerationfor the supply is now regarded as“irrecoverable”. In terms of section22(1) of the VAT Act the vendor mayonly claim relief based on the VATrate that applied to that supply (15%).ZERO-RATED LIST EXPANDSAs part of the government’s measures tocushion low-income households from theworst effects of a 2025/2026 VAT increase,more items have been added to the zeroratedlist. By expanding the zero-itemsbasket, government is forgoing R2-billion inrevenue plus the estimated R23-billion VATrevenue in relation to the existing zerorateditems.SONA 2025 IN NUMBERSECONOMY AND INFRASTRUCTUREFive - years for the implementation of the Medium-TermDevelopment Plan.Three - government strategic priorities to be advanced by theMedium-Term Development Plan.Over 3% - the level of economic growth that government aimsto lift to create the virtuous cycle of investment, growth and jobs.R100-billion - expected from local and international financial investors.More than R940-billion - money that government will spend on infrastructureover the next three years.R375-billion - money to be spent by state-owned companies on infrastructure.Nearly R38-billion - value of 12 blended finance projects approved throughthe Infrastructure Fund last year.WATERR23-billion - money secured by the Infrastructure Fund for seven large waterinfrastructure projects.ENERGYOver 13-billion - US dollars pledged by the international community to the JustEnergy Transition.BUSINESS FUNDING AND JOB CREATIONR20-billion - value of a transformation fund a year over the next five yearsthat will fund black-owned and small business enterprises.Over 10 000 - persons with disabilities to be empowered by the National SkillsFund Disabilities Programme.Almost 2.2-million - work and livelihood opportunities created by thePresidential Employment Stimulus.Over 80 000 – jobs created by the Social Employment Fund in 2025.More than 12 000 - participants supported by the Social Employment Fund toenter entrepreneurial activities.TOURISMClose to 9-million – tourists who visited South Africa last year.YOUTH EMPOWERMENT235 000 – work opportunities secured by young people during the past yearthrough the National Pathway Management Network, which is underpinned bythe SAYouth.mobi platform.Some 4.5-million – young people registered on the SAYouth.mobi platform.SOCIAL ASSISTANCEMore than 28-million – people who receive social grants.More than 10.5-million – learners who go to public schools where they do nothave to pay fees.Over 900 000 – students who received funding to study at universities andcolleges in 2024.HOUSING300 000 – serviced stands to be provided to qualifying beneficiaries to enablehousing development.RAIL TRANSPORTMore than 80% – passenger rail corridors that have been returned to service.Over the next five years – period during which government will restore thePassenger Rail Agency of South Africa’s signalling system.VISIONNext 30 years – period of a vision for the country to be defined by all SouthAfricans coming together in the National Dialogue.Service magazine | 9
