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Is your foreign enterprise liable for VAT? Find out here

by , 08 March 2016
Do you wish to operate a foreign enterprise in South Africa?

If so, then you should know that you may very well be liable for VAT.

And if you fail to do so, you'll face harsh penalties from the South African Revenue Service (SARS).

Let's take a look at when a foreign enterprise, operating in South Africa, will be liable for VAT...


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SARS says that a foreign business must register for VAT if it:

·         Has an income from South Africa which is more than R1 million in the last 12 months;
·         Carries on an 'enterprise';
·         Carries on an enterprise only partly in South Africa; or
·         Holds a once-off event in South Africa (if the income from ticket sales, sponsorships and product sales goes above R1 million).

For Examples:
1. ABC Clothing (UK) decides to open up pop-up stores in Durban and Johannesburg for five months each year in order to sell their excess stock.

Their total income from the five months comes to R1.95 million.

Now, because they are a foreign enterprise operating in South Africa, even if only for a few months a year, they MUST register for VAT with SARS.
2. The business BB decides to hold an international conference in South Africa. It's a massive event that draws in a good attendance.

The event has the support of several well-known sponsors, and the product sales from the conference were excellent.

By the end of the event, the total amount from the all ticket sales, sponsorships and product sales reaches R1.75 million.

The business BB would then be liable for VAT in South Africa.

NOTE: This would apply EVEN though it was a once-off event.

*The above information helps to clarify on foreign enterprises in South Africa with regard to VAT, and in adhering to it your enterprise will avoid unnecessary penalties from SARS.

But did you know that SARS recently changed the definition of 'enterprise'?

So make sure you're up-to-date on this and go to chapter E 04 in your Practical VAT Loose Leaf Service handbook to see what those changes are. After all, how can you know if you're liable for VAT if you don't even know if your business qualifies as an enterprise under
the new definition? 

If you don't already have this indispensable resource, click here to order your copy today and always be up-to-date with South African VAT-related matters. 

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