VAT Registration, Recon & Submissions
Our team can assist you with the full VAT process.
OVERVIEW
Value-Added Tax is commonly known as VAT. VAT is an indirect tax on the consumption of goods and services in the economy.
Revenue is raised for the government by requiring a business, that carries on an enterprise, to register for VAT. In doing so, the business will charge VAT on supplies of goods and services made by it, on the importation of goods and on imported services (subject to certain conditions).
The business will also be entitled to deduct any VAT charged to it, or under limited circumstances from a business that is not registered for VAT, in respect of a supply made to it. The business is required to pay the difference between the VAT charged by it and the VAT charged to it, or claim a VAT refund where the VAT charged to it exceeds the VAT charged by it.
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What is VAT?
VAT is one of those indirect taxes that consumers know they pay, but do not think of as paying taxes per se. This is a very effective way for SARS to collect taxes from millions of taxpayers through a much smaller number of VAT vendors.
The VAT rate changed from 14% to 15% on standard rated taxable supplies on 1 April 2018 which caused a lot of bookkeepers, accountants and finance teams of entities many sleepless nights, but we have all adjusted to the higher rate of levying this indirect tax.
It does not mean that the reconciliation is easy or that responding to a VAT auditor’s queries is a walk in the path.
Who needs to register to be VAT vendors?
- It is mandatory for any business to register for VAT if their total taxable income in any consecutive 12-month period exceeds, or is likely to exceed, R1 million.
- Any business may choose to register voluntarily if the taxable income earned, in the past 12-month period, exceeded R50 000.
- Any business may also choose to register voluntarily if they can prove that they will make taxable supplies exceeding R50 000 in the 12 months following the date of registration.
VAT periods
Category A: Every 2 calendar months. Under this category, a vendor is required to submit one return for every two calendar months, ending on the last day of January, March, May, July, September and November. Paying VAT every two calendar months is also known as paying VAT “bi-monthly.”
Category B: Every 2 calendar months. Under this category, a vendor is required to submit one return for every two calendar months, ending on the last day of February, April, June, August, October and December.
Category C: Every calendar month. Under this category, a vendor is required to submit one return for each calendar month. A vendor will fall within this category if:
- The total value of taxable supplies made by the vendor has exceeded, or is likely to exceed, R30 million in any consecutive 12-month period.
- The vendor has applied in writing to be placed in this category, or
- The Commissioner has determined that the vendor falls within this category due to the vendor repeatedly failing to perform any obligations as required by the VAT act.
Category D: Every 6 calendar months. Under this category, a vendor submits one return for every 6 calendar months, ending on the last day of February and August (or any other month where a written application is made to the Commissioner and approved). This category applies mainly to a vendor who:
- Carries on farming activities where the total value of taxable supplies is less than R1.5 million for a period of 12 months.
- Is a micro business.
Category E: Every 12 calendar months. Under this category, a vendor is required to submit one return every 12 months, ending on the last day of the vendor’s year of assessment (or any other month where a written application is made to the Commissioner and approved). This category applies to a vendor:
- That is a company or a trust fund
- That carries on activities of letting fixed property or renting of movable goods or the administration or management of companies which are connected persons to the vendor
The process for VAT submissions
The full VAT process that we can assist you with entails the following:
- VAT registrations and assistance with the set up of the correct invoicing and VAT coding.
- Bookkeeping and accounting to ensure that all income and expenditure are treated correctly in terms of the VAT act.
- Completion and submission of VAT201 returns.
- Handling VAT verification/audit requests from SARS on your behalf.
- Performing VAT reconciliations between what has been submitted to SARS and what is reflected in your accounting records
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FAQ
Frequently Asked Questions
Where do I submit my VAT returns?
What are the three types of VAT?
There are three different types of supplies that a VAT vendor can make
- Standard rated supplies at 15%. This is normal VAT on goods and services
- Zero rate supplies. Vat is levied on some supplies at 0% VAT
- Exempt / non-supplies. Exempt or non-supplies are supplies that are not subject to VAT
Are there items that are not subject to VAT?
Exempt/non-supplies are supplies that are not subject to VAT. These supplies include, but are not limited to, the following:
- Sport and physical education clubs or activities
- Training and education
- Personal insurance, financial services, investments
What fines and penalties are levied for missed VAT returns or late VAT payments?
- There is a 10% penalty on returns that are filed late to SARS
- There is a 10% penalty for late payment of VAT amounts on returns filed.
- All penalties are also subject to interest from the date that payment should have been made, to the date the payment was made.
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