VAT Registration for your business

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A businesses’ VAT registration can be a daunting task for business owners as there are several regulations and factors to consider. If you find yourself wondering: “Should I register,” “How do I register,” or “What do I need to register,” you would benefit from the comprehensive tax consulting services offered by the MMS team.

According to SARS regulations, all businesses in South Africa are required to register for VAT if their sales or turnover within any 12 consecutive months exceeds, or is likely to exceed, R1million. This is termed “compulsory” registration. Businesses that invoice more than R50 000 in a 12-month period may register voluntarily.

VAT registration is available to businesses with monthly turnover below the R50 000 threshhold, provided certain conditions are met, as follows (note that only one condition has to be met in order to qualify for registration):

  • Taxable supplies have been made for more than two months (but not more than 11 months) of average monthly value in excess of R4 200 per month.
  • Taxable supplies have been made for less than two months i.e. only one month, and the value supplied exceeded R4 200 for that month.
  • No taxable supplies have been made, but you hold a written contract requiring you to render taxable supplies which will exceed R50 000 in the 12 months following registration.
  • You have entered into a financing agreement to fund expenditure incurred or to be incurred in your business and the total repayments in the 12 months following registration will exceed R50 000.
  • You can prove expenditures have been incurred in your business, supported by a formal agreement or proof of capital goods acquired for the furtherance of your business for which a sum of more than R50 000 has already been expended, or will be expended over a consecutive 12 month period commencing before or after your registration date.

If you would like assistance with your company’s VAT registration, and all other tax and compliance matters, you can count on MMS Cloud Accounting.



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HOW DOES VAT REGISTRATION WORK?


For businesses in South Africa, VAT is levied at the standard rate of 15%. VAT is an indirect tax on the consumption of goods and services in the South African economy. It is comprised of Output VAT, which may only be levied by vendors that are VAT registered and Input VAT, which is claimable as a deduction from total Output VAT, on vatable purchases. Only those enterprises registered for VAT are required to charge, collect and pay over VAT to SARS. The total paid to SARS is comprised of Output VAT, reduced by Input VAT. There is a limited range of goods and services that are exempt from VAT, or zero rated.

WHAT DOCUMENTS DO I REQUIRE FOR THE REGISTRATION PROCESS?

To register your business for VAT, the following documents are required:

  • Acceptance as Public Officer
  • Certified ID of Directors
  • Proof of Address (Company)
  • Proof of Address (Public Officer)
  • Tax compliance for all Directors
  • Signed & completed VAT101
  • CIPC documents – CoR 14.1 and CoR 14.3
  • Bank Statements
  • Proof of Turnover (Minimum of 3 invoices)
  • Appointment of Public Officer

CAN I DEREGISTER FOR VAT?

If you are planning on discontinuing your business, or your annual earnings are not exceeding R1million anymore, it is important that your VAT registration is cancelled, and that SARS is notified within 21 days. If not cancelled, you will remain responsible for your company’s VAT payments.

PRACTICAL CONSIDERATIONS

To register your business for VAT, the following documents are required:

  • If your business is registered for VAT, you are required to issue a tax invoice for any sale of more than R50.
  • Your “taxable period” determines the frequency of your VAT payments to SARS. Businesses that file via eFiling have until the last business day of the month following the end of their taxable period to pay the VAT due as per their VAT return. All other business are required to file and pay VAT by the 25th day of the following month. This is an important incentive to file via eFiling.
  • Failure to file a VAT return timeously results in administrative penalties, while late payment of VAT results in an automatic penalty of 10% of the total VAT amount due (even if paid late by only 1 day!) In addition, interest is charged on the funds outstanding (including the 10% penalty) while the total amount due remains unpaid.
  • A retention period of 5 years applies on all records, as of the last entry date. SARS may request these records at any time during this time frame.

Contact our team to ensure that your VAT and taxation compliance requirements are met in advance of all deadlines so that you are able to concentrate on managing, and growing, your business.

Contact us to find out more about how we can be of service.