Abstract
purpose of the study was to explore the research issue at hand, namely that the current South African Value-Added Tax (VAT) Act is legally complex and is therefore complex to teach, apply in practice and administer. The research focus was on the incoherent structure of the VAT Act as an element of legal complexity. The study investigated legal complexities in the VAT Act, including language (plain English, sentence length and active voice, i.e. readability and logical structure) and content of the law (ambiguity; exemptions, rebates and concessions; and annual amendments). A qualitative research methodology was employed and the research design included two phases: a literature review followed by semi-structured interviews. Existing empirical studies on legal complexities were analysed in the literature review. Studies analysed confirm that the poor structure, layout and organisation of the VAT Act contribute to its complexity. Research confirms that improvements to structure, layout and organisation enhance the readability of statutes.
The interviews solicited the opinions of those impacted by the research problem regarding potential legal simplifications of the VAT Act. Interviewees agreed that all elements of legal complexity contribute to the complexity of the VAT Act. Interviewees further commented that the complexity of the VAT Act raises compliance costs. The results of the literature review and interviews contributed to the development of a framework for a simpler South African VAT Act, which is the contribution of this study. Guidelines that informed the framework includes grouping sections together, introducing headings and subheadings, adhering to a VAT vendor’s lifecycle, employing international benchmarks and seeking a solution that addresses local challenges most effectively. As a solution to the research problem, the framework was utilised to develop an index. A recommendation that stands out in the framework is to completely rewrite the VAT Act. As a first step in this rewrite project, it is recommended that the designed index be further developed and incorporated into the VAT Act. This is the initial step towards the simplification of the VAT Act.
Keywords: complexity, incoherent, VAT, framework, index