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Want to apply to become a Category E vendor? Make sure you meet these two Vat requirements first

by , 02 June 2014
Think it's impossible to change from your current Vat category to a Category E vendor? If so, you're wrong.

You too can become a Category E vendor and only submit your Vat returns annually.

But, there's a small catch.

You can only apply to become a Category E vendor and submit annual Vat returns if your company or Trust fund meets the following SARS requirements...

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Errors in Vat invoices could cost you thousands!

Are there any inaccuracies in your Vat invoices? You may be charged a very high penalty!

Click here to find out how to make sure your Vat invoices are 100% legal.

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Two requirements you must meet before you apply to become a Category E Vat vendor
 

The Practical Vat Loose Leaf Service says to qualify as a Category E vendor your enterprise must consist solely of one or more of the following:

#1: Fixed property letting or renting movable goods to companies that are connected persons in relation to you; or

#2: The administration or management of companies that are connected persons in relation to you.

If you meet one of these, you can apply to SARS in writing for approval to submit annual Vat returns.

Your written application must include:

  • Your business activity type;
  • Written confirmation that you only make supplies to connected persons; and
  • A copy of the agreement between you and the connected parties that states you'll issue tax invoices annually and payment will only be due at the end of your tax year.

Below is an example of the application letter you can send to SARS to change your Vat category.

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Think Vat doesn't apply to your payroll?

You're wrong!

Avoid this common error and keep SARS away from your door at audit time.

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Here's an example of a letter you can send to SARS when you apply to become a Category E vendor
 

To: [The SARS office where you are registered]

Dear Sir

VALUE-ADDED TAX: CHANGE OF TAX PERIOD [YOUR VAT NUMBER]

In terms of section 27 (4A) of the Value-Added Tax Act, 1991, we hereby wish to change our tax period from Category A/B/C/D/F (choose whichever is applicable) to Category E.

We confirm that our company carries out the following activities:

Letting of property/ letting of movable property/raising of management fees/raising of admin or secretarial fees (choose which ever is applicable) to connected companies in our group.

Our financial year ends on……………and we thus return our VAT tax period to similarly end on………

We look forward to your reply.

Yours faithfully

……………………………..

There you have it. SARS will only consider your application to become a Category E Vat vendor if you meet the above requirements.



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