VAT

Who should register for VAT?

It is compulsory for a person to register for VAT if the value of taxable supplies made or to be made, is in excess of R1million in any consecutive 12 month period.

Voluntary registration is possible under certain circumstances.

Compulsory Registration  

An application for a compulsory VAT registration must be made within 21 business days from the date the R1 million is or will be exceeded.

Voluntary Registration 

A person may also choose to register voluntary for VAT if the value of taxable supplies made or to be made is less than R1 million but has, under certain circumstances, exceeded R50 000 in the past period of 12 months.

The requirements listed under the Voluntary Registration Regulation are as follows:

• Taxable supplies made for 1 month:
  • Where taxable supplies have been made for only 1 month preceding the date of application, the value for that month must have exceeded R4 200;
• Taxable supplies made for 2 months or more:
  • Where the average value of taxable supplies made in the months preceding the date of application, exceeded R4 200 per month;
  • The average is calculated using a minimum of 2 months and a maximum of 11 months prior to date of application.
• Written contracts:
  • Where taxable supplies exceeding R50 000 in the 12 months following the date of registration must be made;
• Expenditure:
  • Expenses incurred or to be incurred for commencement or continuing an enterprise; or
  • capital goods acquired in connection with commencement of the enterprise; and
  • Payment or any extended payment agreement where:
    • as at registration application date, payment has exceeded R50 000; or
    • in any consecutive 12 month period commencing before and ending after registration application date, payment will exceed R50 000; or
    • in the 12 months following registration application date, payment will exceed R50 000
  • Finance Agreement:
    • Financial agreement with a registered bank; or
    • Credit agreement with a credit provider as per National Credit Act; or
    • Agreement with a designated entity, public authority or other person who continuously or regularly provides finance; or
    • Financial agreement with a non-resident; and
    • The total repayment in the 12 months following registration application date must exceed R50 000

In addition, there are other general requirements that must also be met for a voluntary registration for VAT.

How does the VAT liability date work?

• Voluntary VAT registrations:
  • The VAT liability date will be set according to the date of application. The backdating of a voluntary registration is not allowed. If you want to backdate your voluntary registration application, you must provide SARS with the necessary supporting documents to justify the backdating request.

• Compulsory VAT registrations:
  • The SARS eFiling (RAV01) system only allows backdating up to 6 months from the date the compulsory registration threshold of R1 million was exceeded.