VAT South Africa - VAT Registration and How much is it
VAT Meaning
Value Added Tax (VAT) is an indirect tax which is levied on the "VALUE ADDED" throughout the chain of the supply of goods and services. The ultimate burden of the VAT system lies with the final consumer in the chain who pays vat and isn't able to claim input VAT back from SARS.
It is very important to ensure that the VAT returns are submitted correctly and timeously to avoid undergoing an audit with an adverse outcome.
SARS has access to all taxpayers' bank accounts this includes details on income and expenses, and this has been in effect since a notice to all “reporting institutions,” as published in the Government Gazette of 29 February 2012.
VAT is governed via the VAT Act 89 of 1991
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Frequently asked questions
How much is VAT in South Africa
It is important to note that with VAT we are looking at taxable supply of goods and services. Even though some consumption of goods won't have a VAT implication/VAT Excluded, they must be declared as such to SARS.
The different types of supplies subject to VAT and their rates of VAT:
- Supplies at Standard rated supplies - VAT is charged at 15%
- Supplies that are Exempt from VAT - no vat
- Supplies that are Xero-rated - 0%
What are the SARS Tax Invoice Requirements
SARS has specific requirements for an invoice to be considered a valid VAT invoice and for it to be taken into consideration for VAT purposes. These requirements include:
- A VAT registration number of both seller and buyer (whomever are VAT Vendors)
- A description of the goods and services
- The VAT Rates
- The serial numbers of supplies of goods
- Quantities
- Total VAT and Invoice Total
- Address of the Seller and Buyer
- Company names
How does VAT work in South Africa
In its most basic form you have:
Input tax - this results from expenses and can be claimed from SARS
Output tax - this results from income and must be paid to SARS
Difference between VAT and TAX South Africa
Many new small business owners get confused with VAT and Tax. They think that once the VAT is paid on products or services that they won't be taxed again on their income.
A business' sales will be exposed to VAT in the sales process and should the entity's trading activities result in a profit then this profit is exposed to income tax.
SARS VAT Registration
To register for VAT you can either do so voluntarily if your revenue is under R1m but higher than R50k. If your revenue from taxable supplies exceeds R1m per 12-month period then it is compulsory to register for VAT.
Are financial services included in taxable supplies
Financial services are exempted as long as they are non-fee related financial services.
How to calculate VAT in South Africa
If you are looking for a SA VAT Calculator South Africa, then this is most likely best achieved by accounting software.
The vat calculation formula for a tax period is calculated as follows:
Output VAT less Input VAT = VAT Liability or a VAT Refund
How to submit VAT returns
You would need to submit a VAT201 to the tax authorities. This is done via SARS efiling.
Extra's
Read our Blog on VAT Vendor Meaning - How much is vat inb south africa
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