Is your business up-to-date with Vat implications of the latest Budget Speech?
As expected, this year's Budget Speech ended up confusing many South Africa citizens. When it comes to implications of the Vat Act in particular, one of the main areas of confusion is how to register your business for Vat if you operate over the internet. Here's what you need to know!
Understanding the Vat Act is a huge headache for many tax practitioners.
For example, in this year's Budget Speech, Finance Minister Pravin Gordhan said that SARS is looking to 'curtail foreign businesses who supply goods and services in cyber space from escaping the Vat net,' says Lexology
What do you do if your business does offer products over the Internet?
To satisfy SARS in this regard, you'll need to make sure you've registered for Vat in the country where the consumer resides.
'While the Vat law seems relatively uncomplicated, applying it is notoriously difficult—so much depends on context,' says Faith Ngwenya, technical executive at the South African Institute for Professional Accountants (SAIPA).
Two ways you could be contravening the Vat Act…
For example, you could be using the wrong way to account for Vat. This will mean you're underpaying SARS and will leave you liable for a hefty penalty, says FSP Business
And if your business creates Vat-exempt supplies, you can't claim input tax credits back from SARS either, says the Tax Bulletin
Luckily, if you're a SAIPA member, you can find out more from the SAIPA Vat Guide
, which will be sent to members later this month for free. You can also access an electronic copy from SAIPA's CoTE website
If not, speak to a tax adviser with an expertise in Vat to make sure you're totally compliant with the Vat Act.
And don't forget that tax advisors have until 1 July 2013 to register with a recognised controlling body like SAIPA or face criminal sanctions if they continue offering advice or submitting tax returns for your business without it, reminds Bizcommunity
Note: 5 of 1 vote