The VAT rate for cooking oil and liquid petroleum gas (or gas) will be chargeable to VAT at the rate of 12 percent as from 03 February 2023.
The two products were conferred with a temporary 6months VAT rate of 0 percent as from 3 August 2022. We will focus on the technicalities of this new development below. Keep on reading and allow us to help you understand this special exemption and how you can take advantage of the same. In this article, words importing the masculine shall be deemed to include the feminine.
12 percent VAT period extended
This development follows the publication by the Minister of Finance and Economic Development, Hon Peggy Serame of Statutory Instrument No 5 of 2023 on 11 January 2023 whose main effect is to extend the timeframe for the application of the 12 percent VAT rate to 31 March 2023. This succeeds the reduction of the VAT rate effective 3 August 2022 from 14 percent to relieve the nation of spiralling inflation. According to the Interpretation Act, the 12 percent VAT rate was supposed to bounce back to 14 percent w.e.f 03 February 2023. This has now been extended to 31 March 2023 and it means that all goods & services which are not exempt or zero-rated will be subject to VAT at 12 percent till then.
Cooking oil & gas
The recent statutory instrument, unlike the one issued in August 2022, is silent regarding cooking oil and gas, which leads to the obvious effect that such goods shall be chargeable to VAT at 12 percent from the current zero percent. In simple, this signals the end of the temporary VAT relief conferred on these two products. To the consumer, this means that the retail price of the said goods will rise by 12 percent as from 3 February 2023. If the price of a bottle of cooking oil is currently pegged at P40, the price will rise to P44.80 when the relief window closes on 2 February 2023. This means that VAT-registered businesses must then levy 12 percent VAT as from 3 February 2023, failure of which opens them to VAT exposures.
Why 03.02.23?
In case you may be asking why we say that the VAT will apply as from 3 February 2023, we can get elucidation from section 40 of the Interpretation Act. That section basically says that if a period is counted in months, one goes to the same corresponding date after the said months but then goes back by one day. For example, the reduction legal instrument stated that the VAT on cooking oil and gas was reduced for 6months from 3 August 2022, the corresponding date after 6months from that date is 3 February 2023. We then move 1 day backwards to determine when the relief ends, which is 2 February 2023.
Conclusion
Traders registered for VAT must therefore continue to charge 12 percent VAT on all other goods and services which are not exempt or zero-rated until 31 March 2023. It is expected that another statutory instrument will be issued before the last-mentioned date either increasing or maintaining the said VAT rate. On the other hand, VAT registrants must however start charging VAT at 12 percent on cooking oil and liquid petroleum gas as from 3 February 2023 as the 0 percent VAT rate window closes on 2 February 2023, except if another legal instrument stipulating a contrary position is published before that date.
Well folks, we hope that was insightful. As us the two Yours Truly say goodbye, remember to religiously pay your taxes. If you want to consult, join our free Tax WhatsApp group or to know about our 9 Tax e-books, send us a text on the +267 71 81 5836. You can read more tax articles on our website, www.aupracontax.co.bw under the ‘Tax articles’ tab.
