VAT Registration, Recon & Submissions
Our team can assist you with the full VAT process.
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 Value Added Tax?
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 with SARS to be VAT vendors?
VAT Submission Dates
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:
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:
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:
The process for business VAT submissions
The full VAT process that we can assist you with entails the following:
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Frequently Asked Questions
In South Africa, Value Added Tax (VAT) is applicable to services. VAT is a consumption tax imposed on the value added to both goods and services at each stage of production or distribution. While most services are subject to standard VAT rates, certain exemptions and zero-rated categories exist. Exempt services do not attract VAT, and businesses cannot claim input VAT credits on related expenses. Zero-rated services are subject to a 0% VAT rate, allowing businesses to claim input VAT credits. It’s advised to refer to the latest guidelines from the South African Revenue Service (SARS) or consult a tax professional for accurate information on VAT obligations for services.
Yes, consultancy services in South Africa are generally subject to Value Added Tax (VAT). Consultancy services fall under the category of services that are typically subject to the standard VAT rate, unless they qualify for an exemption or fall under a zero-rated category. It is important to consult the latest guidelines from the South African Revenue Service (SARS) or seek advice from a qualified tax professional for the most up-to-date and accurate information regarding VAT on consultancy services.
Determine the VAT Rate: Identify the applicable VAT rate for the specific goods or services. The standard VAT rate in South Africa was 15%. However, VAT rates can change, so ensure you use the correct rate.
Calculate the VAT Amount: The formula to calculate the VAT amount is:
VAT Amount = (VAT Rate / 100) * Total Invoice Amount
For example, if the total invoice amount is R1,000 and the VAT rate is 15%:
VAT Amount = (15 / 100) * 1000 = R150
Total Invoice Amount with VAT: To determine the total amount including VAT, simply add the VAT amount to the original invoice amount:
Total Invoice Amount with VAT = Total Invoice Amount + VAT Amount
Using the previous example:
Total Invoice Amount with VAT = 1000 + 150 = R1150
Here are the general Value Added Tax (VAT) registration requirements for businesses in South Africa:
Mandatory Registration Threshold: A business is required to register for VAT if its total taxable supplies (sales) in a consecutive 12-month period exceed the mandatory registration threshold. This threshold is subject to change and should be confirmed with SARS. Businesses that expect their turnover to exceed this threshold within the next 12 months must also register.
Voluntary Registration: Even if your turnover doesn’t exceed the mandatory threshold, you can choose to register for VAT voluntarily. This might be beneficial if you want to claim input VAT credits on your business expenses.
Resident and Non-Resident Entities: Both resident and non-resident entities conducting business in South Africa may be required to register for VAT, depending on their sales and the nature of their transactions.
Application Process: To register for VAT, you typically need to complete and submit the VAT 101 form to SARS. The form can be submitted electronically via eFiling or in person at a SARS branch.
Documentation: Supporting documentation, such as financial statements, proof of business activities, and identification of key individuals, may be required during the registration process.
Tax Clearance: SARS may require that the business is tax compliant and has a valid tax clearance certificate before approving the VAT registration.
Accounting Records: Registered businesses must maintain accurate and complete accounting records, including invoices, receipts, and other relevant documentation.
Filing and Payments: Registered businesses must submit regular VAT returns to SARS, reporting their sales and purchases and calculating the VAT liability. Payment of the VAT liability is also required by the specific due dates.
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
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
- 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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