Your Questions Answered About VAT Registrations in South Africa
As a small business owner in South Africa, there is nothing more rewarding than watching your business grow and make money. But as you make more and more money, you will be required to pay VAT. Levied at the standard rate of 14%, VAT is destination based and is ONLY paid on the supply of goods or services in South Africa and on the importation of goods into South Africa. If you’re in the dark about Value Added Tax, we’ve made things easier by answering the most popular questions about VAT registrations.
What Should a Company’s Turnover Be to Register for VAT?
In South Africa, there are two kinds of VAT registrations, namely voluntary and compulsory. While compulsory registration only applies to those businesses that have a sales turnover exceeding R1 million in a 12-month period, voluntary VAT registration applies to businesses that have a turnover of R50 000 and over in the past 12-month period. Voluntary VAT registration can greatly benefit your business expenses, as you can claim VAT back from your supplier purchases, which can be deducted from the VAT you owe SARS.
What is the Process for VAT Registrations in South Africa?
While it’s quite possible for VAT registrations to take a few days at the most, the biggest hold back is not having the right documents and not complying with SARS requirements. You can either elect to register your business as a VAT vendor yourself, or you can make use of a professional accounting and tax consulting service to handle the entire process, so you don’t have to. Once a VAT101 form has been submitted to the nearest SARS branch where your business is situated, SARS will let you know in writing of your registration details and when to submit your returns (your tax period). Should you fail to submit your VAT returns within your given tax period, SARS will charge you penalties of 10% of the amount payable, as well as interest, which will be levied at the standard charge for interest. Keep in mind that you must keep all your VAT invoices and receipts for the next five years, as SARS can request an audit at any time.
Every successful entrepreneur recognises that in addition to an excellent product or service, accounting and tax are the basic ingredients for the success of a business. While there are many businesses that prefer to do their own taxes, there are just as many that choose to work with our qualified accountants and tax consultants at Taxleaders.Net. Don’t take 6 months to register for VAT – contact us at Taxleaders.Net for a VAT registration quote today.