Value Added Tax (VAT) is a form of indirect tax applied to a number goods and services exchanged/consumed within the economy.
What are taxable supplies
VAT can only be charged and claimed on goods or services that aren’t zero-rated or VAT exempt. You might be asking yourself what the difference between zero-rated and VAT exempt are. While both are not taxable, the difference comes in with regard to the VAT paid to manufacture those items. Credit can be claimed for paid VAT inputs that are required for producing zero-rated products. Whereas, if a product is VAT exempt this same credit cannot be claimed.
Registration Requirements
Compulsory Registration
All businesses with taxable supplies that exceed R1 million in a 12-month period must register for VAT. Once you have exceeded the R1 million threshold, you can register for VAT on eFiling. A VAT 101 – Application for Registration must be completed and submitted to a SARS branch within 21 days.
Voluntary Registration
If your taxable supplies are between the R50 000 and R1 million mark (over a consecutive 12-month period) – then you have the option to voluntarily register for VAT.
Taxable Supplies Less than R50 000
In this instance, you can register for VAT if one or more of the following circumstances applies (upon application):
Taxable supplies were made for longer than 2 months, not exceeding 11 months. You must be able to prove that your average value of taxable supplies exceeded R4 200 per month, in the months prior to the date of application.
Taxable supplies made for only 1 month preceding the date of application for registration, it must be proven that the value of those supplies exceeded R4200.
If a person has not made taxable supplies, such a person is contractually required to make taxable supplies exceeding R50 000 in a 12-month period following the date of registration.
If there is the existence of a finance agreement entered into (with a financial provider for expenses incurred for the advancement of the business) with total repayments of R50 000 or more, over a 12-month period.
In the case that a person has proof of expenses set out in a written agreement (incurred or to be incurred), for the benefit of the business. Or the person has proof of capital (goods) acquired to start a business, that either exceeded R50 000 (at date of application) or that (in a 12-month period, beginning before application) will exceed R50 000 sometime after the date of application.
Those involved in any of the following (on a regular or continuous basis) can apply to register for VAT at any time:
Agriculture, Farming, Forestry & Fisheries
Mining or Beneficiation
Ship & Aircraft Building
Manufacture/Assembly of Plant, Machinery, Motor Vehicles or Locomotives
Property or Infrastructure Development
Frequently Asked Questions
When is my VAT liability date? Your tax period will be allocated to you. Unless you have requested and have proof to substantiate a backdated liability, your date is set in accordance with your registration date.
How do I register for VAT? You can either submit a VAT 101 form, along with any other supporting documentation, to your local SARS branch in person (you may also send a registered tax practitioner as a representative of your business) or via the eFiling platform. Applications received by post will only be accepted under specific circumstances, no faxed applications will be accepted.
What goods are VAT exempt? VAT is not charged on basic food items including maize meal, rice, brown bread, dried beans, vegetables, fruit and samp. A detailed list of VAT exempt goods can be found on the SARS website.
I am registered, now what?
Now that you are a VAT vendor you are obligated to:
Include VAT on all quotes and advertised pricing
Charge and collect VAT
Submit returns and payments
Issue tax invoices
Maintain records for supplies
How should I pay VAT?
SARS eFiling
Via EFT
Over the counter to a teller at your bank