Value-Added Tax: Common Questions and Answers
With the 1% increase in Value-Added Tax (VAT), many South Africans have asked themselves how it will affect them. The tax attorneys at Lugisani Mantsha Attorneys have compiled the best article on VAT for both individuals and businesses, and the repercussions it will have on how you make and spend money.
What is VAT?
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 increased from 14% to 15% from 1 April 2018. VAT is levied on the supply of most goods and services and on the importation of goods. The VAT on the importation of goods is collected by customs. 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. You can register once for all different tax types using the client information system. 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, both of which you can find on our page how to register for VAT.
It is mandatory for a person to register for VAT if the taxable supplies made or to be made is, in excess of R1 million in any consecutive twelve month period.
A person may also choose to register voluntarily if the taxable supplies made, in the past period of twelve months, exceeded R50 000. As from the 1st of March 2012, qualifying micro businesses that are registered for Turnover Tax may also choose to register for VAT provided that all the conditions for voluntarily registration for VAT are met.
A person who is obliged to register for VAT is referred to as a vendor.
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 period 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 a penalty and interest.
How do I access older VAT-related documents?
The SARS website does not host old or withdrawn documents, except for those owned by Legal & Policy, for example earlier published Proclamations, Regulations and Government Notices, as well as the archived VAT News copies.
The VAT News copies can be found in the Legal & Policy Archive, which has been made available for research and reference purposes.
All the information provided above can be found on the SARS website. For more information related to VAT, please do not hesitate to contact us. We are more than happy to address all your VAT related issues and questions.