WHAT IS VAT?
- Value-added tax or VAT is a tax imposed on purchasing goods and services. The government usually collects it through the registration of specific vendors.
- Vendors are required to charge Value Added Tax (VAT) on the supplies they make to their customers. This is done based on certain conditions, such as the type of goods and services they provide.
- Taxable supplies are either at the standard 15% or zero rates. A limited number of products and services are exempt from VAT.
- Vendors are also entitled to deduct the VAT they have been charged when making taxable supplies. In certain circumstances, a vendor may claim a deduction for supplies made by a business that isn’t registered for VAT.
- In addition to being non-cumulative, VAT also allows a credit or deduction for the payments made in the previous stages of the distribution and production chain.
- The vendor is responsible for the difference between the input and output taxes.
- The value-added tax is charged at different production and supply chain stages. It is calculated according to the customers’ price for the goods and services.
WHO SHOULD REGISTER FOR VAT?
- Individuals and entities that are engaged in business activities are required to register for VAT. This Act applies to everyone who is a “person.”
- Besides individuals, entities such as partnerships, trusts, and municipalities are counted.
- The term enterprise is defined in the Act as any activity that is carried out continuously or frequently in South Africa. This includes the supply of goods or services to other people for profit.
- In addition, activities that are done to establish or terminate an enterprise are also included in the definition of enterprise for VAT purposes.
Supplies or activities carried out by specific individuals are also counted as enterprise activities.
These include public authorities, welfare organizations, and share block companies. They can also implement foreign donor-funded projects: non-resident electronic service providers and intermediaries.
WHEN MUST A COMPANY REGISTER FOR VAT?
Individuals engaged in business activities in or partly within the Republic must register for the Value Added Tax (VAT).
- Regarding the Act, supplies or activities made in a continuous 12-month period are considered to have exceeded R1 million.
- Regarding contractual obligations, the taxable value of supplies made during 12 months can exceed R1 million.
COMPULSORY REGISTRATION:
Electronic service providers, not residents of South Africa, must carry out a registration for the value of their supplies that exceeds R1 million at the end of each month. An intermediary can also register for the account of their stores.
WHEN IS VAT DUE?
The VAT Submission is due on the 25th of every month if you fall into the Monthly Category, and the payment is expected before the end of the month.
TandA Professional Accounting can Handle Your VAT Registration & Submissions on time.