Erp Systems Ready For Vat Hike But Rollback Risk Looms

The matter is being heard by the high court in the Western Cape on Tuesday, with the Democratic Alliance and Economic Freedom Fighters seeking to have the VAT increase, which is meant to be implemented on 1 May, either blocked or retracted after the fact.

According to Tjaart Malan, chief business and delivery officer at SAP Africa, modern ERP systems are built with robust functionality for implementing compliance-driven changes, including VAT increases, with the editing of one or two system parameters enough to affect changes throughout an organisation's sales, accounting and payroll functions.

"The new VAT rate will be applied on the effective date while ensuring that historical data and transactions are still processed at the correct old VAT rate," Malan said in response to a query from TechCentral.

Ongoing transactions, meaning those that were initiated prior to the VAT increase coming into effect, ought to be charged at the previous rate of 15, even after the new 15.5 rate becomes the status quo. Enterprise solutions, especially those using modern cloud-based ERP systems, should not have much trouble assigning the correct rate to each transaction, said Malan.

Although systems should not be adversely affected by the changes in VAT, Malan said the VAT hike will have an impact on other aspects of business, including marketing, sales, employee training and risk management.