What you need to know about Vat?
SARS explains in its website that Vat is an indirect tax on the consumption of goods and services in the economy.
'Revenue is raised for government by requiring certain businesses to register and to charge Vat on the taxable supplies of goods and services. These businesses become vendors that act as the agent for government in collecting the Vat.'
In its simplest form, Vat is nothing more than a tax levied on the supply of goods or services.
It's levied at the standard rate of 14% on the supply of most goods and services and when goods are imported. The Vat on the importation of goods is collected by customs.
Should you register for Vat?
SARS says that any person that carries on a business may register for Vat. Checkout this article to find out about the requirements for Vat registration and the turnover threshold for Vat registration.
Please note that when SARS says 'person', the term isn't only limited to companies but also includes, amongst others, individuals, partnerships, trust funds, foreign donor funded projects and municipalities.
This is important because failing to register can land you in deep water…
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!
Warning! If you're liable to register for Vat but fail to do so, SARS will punish you.
In this article, we explained that 'any person who is liable to register for Vat but fails to do so is guilty of an offence and will be liable on conviction to a fine or imprisonment for a period not exceeding 24 months.
There you have it. Knowing what Vat is will bring you a step closer to complying with Vat law and you'll avoid harsh penalties by SARS.