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Revealed: Three requirements you must fulfil with registering for Vat

by , 10 January 2014
You can't just register your business for Vat. You have to play by the rules by meeting these three requirements first...

There are three requirements you must meet to register for Vat.

Do you know what these are?

Here are the three requirements for Vat registration

The Practical Vat Loose Leaf Service explains that to register for Vat, your business must meet the following requirements set out by Vat law:

  1. Your business must be an enterprise;
  2. Your business must exceed a turnover threshold; and
  3. Your business mustn't supply exempt supplies only.

But what do these criteria mean and how do you go about finding out if you qualify to register for Vat?

Let's take a look.

Enterprise: The Vat Act says if your business is as an 'enterprise', you can register for Vat.

What exactly is an enterprise?

The Accounting & Tax Club says in terms of Vat law, the word enterprise is a collective word that refers to whether an activity is carried:

  • On a regular or continuous basis
  • Inside South Africa OR partly inside South Africa

It also refers to the following cases:

  • Where something is received in exchange for you supplying goods or services – that something may or may not be money
  • Where a profit may or may not be made.

If your business activities qualify for all of the above, it's an enterprise.

Remember, an enterprise also includes:

  • Municipalities;
  • Some government departments;
  • Underwriting members of Lloyds of London;
  • Welfare organisations;
  • Non-profit organisations;
  • Section 21 companies;
  • Share block companies;
  • Rentals;
  • Home owners' associations; and
  • Foreign donor funded projects.

Turnover: When you establish you're running an enterprise, you need to check your turnover.

Vat law gives certain turnover amounts. This means you must consider these before you register for Vat. The turnover amounts are for any period of 12 months.

Vat registration turnover thresholds

  • More than R1million - You're legally liable to register for Vat
  • Less than R1million but more than R50 000- You can voluntarily register
  • Less than R50 000 - You aren't allowed to register for Vat because this is a minimum threshold (R60 000 for commercial accommodation)

Well there you have it. These are three requirements you must meet to register for Vat.

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