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Vat registration for foreign businesses explained

by , 03 March 2014
It seems like Vat law has everything covered. It even states what foreign businesses must do when it comes to Vat registration. Read on to find out more about this.

What you need to know about Vat registration for foreign businesses

In this article, we explained that there are three requirements you must meet to register for Vat:
  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.

So does the same criteria apply to foreign businesses?

According to the Practical Vat Loose Leaf Service, if you're a non-resident company (foreign business) and supply goods or services in South Africa, you must register for Vat if your supplies exceed R1 million in any 12-month period, or you expect it to exceed R1 million in the next 12 months.

If you don't register, your company's in breach of Section 1 and Section 23 of the Vat Act and you'll be liable for penalties and fines in terms of the Tax Administration Act.

Bear in mind that according to the definition of 'enterprise' in section 1 of the Vat Act, an enterprise includes any activity carried out in South Africa, or partly in South Africa. So your foreign business definitely meets one of the requirements for Vat registration.

Basically, your foreign company doesn't need to have a permanent establishment or physical presence in South Africa to be liable for Vat registration; it just needs to carry out an enterprise. And, if its turnover from this South African enterprise is more than R1 million, it's compulsory to register for Vat.

There you have it. Now that you know what Vat law says about Vat registration for foreign businesses, make sure you comply to avoid penalties.

Any person who is liable to register for Vat but fails to do so is guilty of an offence and may be liable to a fine or two years imprisonment. Don't get caught out!


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