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 government by requiring certain businesses to register and to charge VAT on the taxable supplies of goods and services. These businesses become vendors that act as the agent for government in collecting the VAT.
VAT is charged at each stage of the production and distribution process and it is proportional to the price charged for the goods and services.
VAT Registration is levied at the standard rate of 15% on the supply of goods and services by registered vendors. A vendor making taxable supplies of more than R1 million per annum must register for VAT. A vendor making taxable supplies of more than R50 000 but not more than R1 million per annum may apply for voluntary VAT registration. Certain supplies are subject to zero rates or exempt from VAT.
There is a limited range of goods and services which are subject to VAT at the zero rate or are exempt from VAT.
Who should register for VAT?
Any person that carries on a business may register for VAT. The term person is not only limited to companies but also includes, amongst others, individuals, partnerships, trust funds, foreign donor funded projects and municipalities. In order to register, an application form must be completed and a specific process must be followed.
Types of Vat Registrations
- Mandatory VAT Registration: As soon as your Company exceeds R 1 million in sales within a 12 months period, it becomes mandatory to register for Vat at SARS.
- Voluntary VAT Registration: You can register your new Company for VAT voluntarily if you need a VAT Number.
In order to apply for VAT, the following documents and information is required:
- CC/Company registration documents.
- Company and member/director contact details
- Business description/activity
- CC/Company needs to be registered for Income Tax.
- SARS Power of Attorney which gives us the authority to apply for VAT on your behalf (which will be sent to you via email once the order is placed).
- Certified Clear ID copy of Member(s)/Director(s).
- An Original letter from the bank confirming the business bank account (must state when the account was opened, with a bank stamp not older than 1 month).
- Latest original (3) months Bank Statement along with Invoices to your Clients, the total of monthly invoices must be in excess of R50,000 per month for the any one month on the supplied bank statement. These invoices must reflect on the supplied bank statement.
- Original latest Municipal statement of Account in the Business name, if not available then you can provide the municipality account in the member/director’s name and a lease agreement showing that your company leases this property from the member/director.
Note that SARS can come out for site inspection to verify if the business is trading and its activities.
This VAT Registration process takes 2-5 business days. However, if there is a delay from SARS due to excessive workload, the process could take longer.
If SARS decides to come for site inspection, the process could take 21-40 business days.
When should I submit returns and make payments?
A vendor is required to submit VAT returns and make payments of the VAT liabilities (or claim a VAT refund) in accordance with the tax periods allocated to the vendor. The VAT returns and payments are normally submitted / made on or before the 25th day after the end of the tax period. Late payments of VAT will attract penalties and interest.
Cost for VAT Registration: R 1 499.00