VAT

When should a person register?

Persons who make taxable supplies in excess of R1 million (from 1 March 2009) in any 12-month consecutive period are liable for compulsory VAT registration, but a person may also choose to register voluntarily provided that the minimum threshold of R50 000 (from 1 March 2010) has been exceeded in the past 12-month period.

Which supplies are exempt?

These are all listed in section 12. Examples include: Certain financial services (excluding financial services charged at the zero rate), Supplies by any “association not for gain” of certain donated goods or services, Rental of accommodation in any “dwelling”, as defined, predominantly used as a residence or an abode of a natural person (including employee housing),Certain educational services supplied by the State or any institution of a public character (e.g. pre-primary, primary, secondary and tertiary educational institutions) and all services subordinate and incidental thereto (e.g. board and lodging, school books, etc.),Services of employee organisations, e.g. trade unions, Certain services to members of a sectional title, share block or old age scheme funded out of levies (not applicable to timeshare schemes),Public road and railway transport to fare paying passengers and their luggage (zero-rated international transport will override the exemption).

What are my duties as a registered VAT vendor?

Submit returns (VAT 201) and pay VAT due on time; • Properly account for VAT on an invoice basis of accounting unless a payments basis has been approved; • Furnish “tax invoices” or issue debit and credit notes as and when required to customers within 21 days of request; • Advise of any change in status within 21 days. E.g. trading name, address, nature of the principal enterprise, etc; and • maintainproper records for at least 5 years.

What is a tax invoice and what is its purpose?

It is a special document which is required to be held by a vendor to claim input tax. The term is dealt with in section 20 of the VAT Act which sets out what is required to be reflected on the document. It is also required by tourists wishing to claim a VAT refund on goods which they are  removing from RSA.

Are there any instances where the VAT number of the recipient will not be required on a tax invoice?

Yes, there are some exceptions such as:-Where the document is an abridged tax invoice (consideration less than R3 000), If the Commissioner is satisfied that there will be sufficient records and that it will be impractical for the requirement to be met & Where the supply is to a non-vendor/
foreign tourist.

What if I sell only to individuals who are not registered for VAT?

The new requirement will not apply and you may issue the tax invoice without the VAT number. The space on the tax invoice where the customer’s VAT number would otherwise be completed may be left blank, or the words “non-vendor” may be inserted.

If the supplier has not included my VAT number on the tax invoice, can I complete the details myself?

No, the tax invoice must be returned to the supplier so that it can be corrected. Alternatively, if the tax invoice cannot be corrected, it must be cancelled, a credit note issued, and a new tax invoice issued with all the correct particulars. ? If the supplier is not aware of the new requirements for tax invoices, when you raise the issue with the supplier, it will draw attention to the fact that he/she is not complying with the law. This will encourage that person to take the necessary corrective action.

VAT:

  • Particulars of Person / Enterprise applying
  • Particulars of 2 most senior partners / members / directors / shareholders / trustees
  • Financial particulars
  • Particulars of representative vendor
  • Banking particulars (Must be a registered bank in South Africa)
  • Copy of the identity document of the individual, Copy of the identity documents of the 2 most senior partners of the partnership, Copy of the identity documents of the 2 most senior members / directors / shareholders / trustees, Copy of certificate of incorporation, Copy of constitution.
  • Original cancelled cheque or original letter from banker
  • Copy of the identity document or copy of passport of the representative vendor
  • Recent copy of the Business Municipal account
  • Recent copy of the Residential Municipal account of individual , partner or representative vendor
  • Copies of bank statements for the past three months but not older than one month from application
  • Copy of financial information to determine value of taxable supplies eg invoices (no cash flow projections will be accepted