SARS Clamp Down on VAT Registrations - Can you register for VAT
As reported in a media release by the SA Revenue Service in May 2023 there has been a stricter look at all VAT Registrations coming into SARS. SARS re-iterated its commitment to paying taxpayers their refunds when they become due. Approximately 83% of the SARS refunds that were paid in 2022/2023 were VAT refunds.
It is no wonder that should this system be abused that it would have very big repercussions for the fiscas.
SARS indicated that the transactions were picked up by its sophisticated risk engine. This risk engine picked up the unusual number of suspicious VAT registrations. These suspicious registrations that caused the spile, occurred around April 2023.
SARS realised that its platform which it uses provides ease of registration however it made it easy for those looking to defraud the revenue service of fraudulent refunds. It was for this reason that the system had to be tweaked to stop this from reoccurring.
When the revenue service is defrauded it takes away from the budget of the fiscas and that adds to pressure on "tax rate increases". It is often the innocent taxpayers that pay the price when they feel increases in tax rates.
In response to this, SARS introduced the following to the registration process (which was implemented immediately on announcement):
- New applicants are put through a new system of approval (approval is no longer automatic). SARS could request that the "vendor" should present themselves at a SARS branch for validation and accreditation.
- Visits or appointments with SARS must be pre-booked. Your tax practitioner will be able to assist and guide you.
- Supporting documents must be submitted at a SARS branch on the day of the appointment.
- SARS only approves the application if they are satisfied that the registration is lawful.
Supporting documents must be submitted correctly and pass through a detection process to be validated and evaluated.
Furthermore, SARS issued a stern warning to potential perpetrators, that should they try to steal from the fiscus, that they will face criminal charges.
SARS Commissioner Mr. Edward Kieswetter said: “SARS is augmenting its human effort using data insights, artificial intelligence and machine learning algorithms to enhance its capability to identify those engaged in criminal activity. Those who underestimate our resolve, do so at their own peril. Furthermore, I wish to apologise to honest taxpayers for the inconvenience that this may cause”.
SARS carries out the mandate of revenue collection without fear, favour or prejudice. Stay on the right track and pay your taxes and submit correctly.
To sum it up you are not guaranteed of a VAT registration anymore, you now have to go through a SARS Validation process.
Frequently asked questions:
What is required to register for VAT?
Aside from fulfilling requirements of being classified as a Vendor and only claiming on those goods and services in the furtherance of an enterprise, the following documents will be required by SARS to assess your application:
- Copies of invoices issued;
- Signed financial statements;
- Written approval confirming that the tender was awarded;
- Copies of written signed contracts;
- Sale agreements;
- Copies of signed lease agreements (the lessee and lessor cannot be the same person);
- Plans, rezoning documents, financing methods and / or signed offers of purchase which indicate occupation date for property developers;
- In respect of going concern transactions, proof of taxable supplies made by the seller of the business.
Can I claim VAT on purchases from non vendors?
There are instances where notional VAT can be claimed if incurred in the furtherance of the enterprise and specifically the income producing activity (direct link).
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Follow this link to read the SARS Media Release
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