Any person who is liable to register for Vat but fails to do so is guilty of an offence. Don't get caught out by SARS!
When you register as a Vat vendor, you effectively become a SARS tax collector and part of the Vat collection system. You'll be accounting to SARS for the value added tax levied by you on the goods or services you supply in the course of conducting your business activities.
How do you know if you qualify?
Should you register as a vendor?
There's no limit to the type of enterprise or business that will qualify for Vat registration, because an enterprise is very broadly defined in the Vat Act as being a business in the broadest sense of the word.
What is an enterprise?
Operating an enterprise is a basic requirement to register for Vat, in terms of Section 1 of the Vat Act
But what is an enterprise?
Checklist: Four ways to tell if you run an enterprise: Answer yes/no
❑ Does your business carry on any activity where you supply goods or services (note: any activity)? Yes/No
❑ Does your business carry on this activity on a continuous or regular basis? Yes/No
❑ Does your business carry on these activities in SA or partly in SA (if it's a foreign business? Yes/No
❑ Does your business receive consideration for the supply of your goods or services (this need not be only money, but could be on a barter transaction, for example)? Yes/No
If you answer yes to all four of these, your business is an enterprise and you can register for Vat.
But, there are two Vat registration types. Under which one must you register?
Let's have a look below…
Three instances when you must apply for Compulsory Vat registration...
Three instances when you must apply for a Voluntary Vat registration...
If you have a business and your total taxable turnover exceed R1 million in the previous 12 months, you have no option – you must register for Vat.
If you have a business and your total taxable turnover will, in terms of a written contractual commitment, exceed R1 million in the next 12 months, you must register for Vat.
If you're a foreign supplier of electronic services and your taxable supplies to South African customers exceeds R50 000 in any 12-month period, you must register for Vat.
Even if your taxable turnover doesn't exceed the R1 million threshold, you can register for Vat in any of the following situations:
You acquire a business as a going concern from a determined date, and that business had a taxable turnover of more than R50 000 in a previous 12-month period;
If your enterprise is a welfare organisation, share block company or municipality, you can opt for voluntary registration even if you made less than R50 000 in a previous 12-month period; or
If your taxable supplies will only be made after some time, but you reasonably expect to make taxable supplies that exceed R50 000 in value over the 12-month period, you can register as a Vat vendor.
For example, a new gold mine will have start up expenses, but will only go in to production in a few years time. This type of enterprise can register for Vat. Regulations will be published stating what type of businesses can register in these circumstances. If your business registered under these conditions. You must account for Vat on the payments basis until you reach R50 000 turnover.
Can you get away with avoiding or failing to register?
No! Any person who is liable to register for Vat but fails to do so is guilty of an offence. You'll face an R80 000 fine or two years in jail, plus being held liable for the Vat due by the business.
Avoid these costly mistakes by getting your Vat registration right the first time. You'll find step-by-step instructions in the Practical Vat Loose Leaf on how to complete your VAT101 'Application for Registration' form correctly.
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