What is a VAT Vendor and who must register for VAT
VAT is the acronym for Value-Added Tax. VAT is an indirect tax charged on the consumption of goods and services in the economy.
Traders are VAT Vendors either because:
- They registered voluntary or
- They reached the income threshold where it is compulsory to register.
You are a VENDOR after you have registered for VAT.
VAT Vendors can be individuals or legal entities like companies. Cash flow statements provide visibility of upcoming costs and regular outgoings so you can understand the financial health of your business.
For your VAT registration on efiling you would need to meet the vat threshold South Africa. Voluntary VAT registration is possible on vat for small businesses in South Africa
Frequently asked questions:
Who is a VAT Vendor
The VAT Act classifies you as a VAT Vendors. Either in terms of reaching the threshold or who registers out of their own or who SARS identifies as a Vendor.
Who must register for VAT
When turnover exceeds R1 million in a consecutive 12 month period. This turnover must be from the taxable supplies of goods and services.
When can I register for VAT
Registering as a vendor is possible if your sales in the past 12-month period exceeded R50 000. You can then opt for voluntary registration of VAT.
When to register for VAT on a voluntary basis
If your purchases will exceed your sales, then you will essentially get VAT refunds.
What are the VAT Registration requirements South Africa
The basic requirements for a business to become a registered vat vendor and get your vat number South Africa:
- Within the registration thresholds
- Be a legitimate trading activity.
- Satisfy SARS documentary requirements and queries
What happens if I don’t pay VAT
If audited, then SARS can go far back and recover the unpaid VAT. They can add penalties and interest and possible imprisonment for tax evasion if found guilty.
What happens if I don't pay a VAT Return
SARS issues a late payment penalty of 10% immediately after you have missed the deadline.
What is the VAT Payable
The net result of claiming input vat and output vat charged vat is the VAT payable or refundable from SARS.
Must I issue tax invoices
If you are a vendor, then you must charge VAT on all your tax invoices as you are subject to VAT.
What are standard rated supplies
These are taxable supplies levied at the standard rate of added tax VAT which vat is levied currently rate of 15%.
How can I do a VAT Vendor Search
If you would like to verify a VAT Vendor you can go to: VAT Vendor Search (sarsefiling.co.za)
How to register a company for VAT
If you are wondering how to register for a VAT number. Company VAT Registration can be done online. A company VAT number will be issued if SARS is satisfied that you meet the requirements.
What is a VAT Registration number
It is a SARS VAT number that is directly associated with your business or trading activity.
How do I get my VAT number
Your vat online registration will result in the VAT registered company now having access to the new vat reference number. A vat registration certificate will detail your VAT number.
What do the different elements of VAT mean
What you can claim when spending as a Vendor - Input Tax
What you must pay when earning as Vendor - Output Tax
Items exempt from VAT - Exempt Supplies
How do I register for vat on efiling
Please note small business vat registration can be done if you have a valid sars efiling profile. You also need to meet the criteria to become a VAT vendor.
You can register on sars efiling however it is advised to have a tax practitioner process this as errors can cause a lot of headaches further down the line.
Final word
It is ideal to purchase from other VAT Vendors if you are a registered Vendor. Purchasing from other Vendors allows you to claim Input Vat. The biggest shock for a newly registered vendor comes when they are due to submit VAT but their books are outdated.
Having a good process and also professionals on hand is essential to ensuring your returns are correct. The best piece of advice we could give you is to open a savings account when you first register for VAT. Once you have this dedicated savings account, set a weekly transfer of funds. This will ensure you have saved the funds required to meet most of your VAT obligation.
The biggest risk as a VAT Vendor is not having the cash to pay. Remember once registered then you owe SARS 15% whether you can afford it or not.
Good product costing will ensure you cover all costs and VAT. Having a good accountant is the best route to keep you in the green with SARS.
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