VAT

How do I register for VAT

What is VAT?

VAT is an additional tax that you pay on certain products you buy. The current VAT rate is currently set at 15% SARS. VAT is only payable when purchasing from businesses who are registered for VAT by SARS.

When should my business register?

It is compulsory for all businesses to register at SARS for VAT, if the company’s sales exceeded R1m for 12 consecutive months. This includes all business types, private companies, close corporations and sole proprietors. It is the responsibility of the company to apply for a VAT number within 21 days.

It is also possible to do a voluntary VAT registration. This can be done if the the total taxable supplies during the previous 12 months exceeded R50 000. Proof of this has to be provided to SARS.

What to do after the VAT registration

After the registration the company will receive written confirmation from SARS. This document will contain the VAT liability date, which is the date on which VAT must start to pay VAT. This document will also indicate in which months the VAT returns are to be submitted.

Submitting returns

Before submitting your VAT returns, the amount payable or refundable must be calculated. This is done by deducting the input VAT(VAT paid on purchases) from your output VAT(VAT received on sales). Once this is done, the VAT returns can be submitted. Please keep in mind that there are products which are VAT exempt.

VAT for your business

How to deal with a VAT audit.

Typically, VAT returns are randomly choose VAT returns to audit. This can also happen if the figures submitted differs drastically from previous periods. Also when a VAT refund is submitted. When the return is flagged for audit, the taxpayer will be notified by in writing. As soon as this happens, the taxpayer has to submit a copy of the VAT calculation, ie VAT report, together with sample invoices. The taxpayer will be notified when the VAT audit is finalized, or whether more supporting documents have to be submitted.

Why is my refund not being paid?

This can be due to an ongoing audit. There are also certain situations where SARS put a “stopper” on a VAT refund. This simply means that a request must be made in writing to remove the stopper, and the banking details of the company has to be confirmed.

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VAT refund

I am a registered tax practitioner with more than 10 years' experience with tax and accounting.  Thank you for reading my content, I hope you find it helpful.  Be sure to contact me with your tax related questions.