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Beware the penalties for getting your zero-rated Vat wrong

by , 24 October 2014
There are two kinds of taxable Vat supplies. One with the standard Vat rate of 14% and the other with a Vat rate of 0%.

Supplies with the 0% Vat rate are what we refer to when we talk about zero-rated supplies.

If you sell zero-rates goods or services, it means you don't have to charge your clients any actual Vat.

Because of this, SARS is very strict if you get zero-rate Vat wrong.

Read on to find out what the consequences for this mistake are...


Get your zero-rated Vat wrong and these are the consequences you'll face

When you charge Vat at the zero-rate, you must prove to SARS that you're entitled to do so! You do this by having all your documentary proof 100% correct. 
If you don't have the correct documents, SARS will see the zero-rated invoice as a standard-rated one and will deem 14% to be the amount of Vat rate that must be included. Plus, it will charge you additional penalties and interest.
You will end up losing money and, as a result, you'll be out of pocket by 14% of the supplies amount. 
But that's not all that could happen to you.
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Here's what else SARS might do if you get your zero-rated Vat wrong

If you repeatedly make this mistake, SARS will conduct a Vat audit on your company to find out if you're complying with Vat laws or not. If it finds errors, it won't be lenient.
As you can see, it's just not worth it to get your zero-rated Vat wrong.
Now that you know what the meaning of zero-rate Vat is and the penalties for getting it wrong, check out the Practical Vat Loose Leaf Service to find out which items and services you can claim zero-rate Vat on and the documents you need to do so.

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