Do you need to Register for VAT? To get a VAT Number, a business needs to follow a manual application process a SARS Branch. We provide a Specialised and Fast VAT Registration Service. You can be located anywhere in South Africa and follow our Easy Online VAT Registration Process. We will go to a SARS Branch on your behalf and get your VAT Number within 1 week @ only R2290.
Types of Vat Registrations
- Mandatory VAT Registration: As soon as your Company exceeds R 1 million in sales within a 12 month period, it becomes mandatory to register for Vat at SARS.
- Voluntary VAT Registration: You can register your new Company for VAT voluntarily if you need a VAT Number.
Requirements to Register for VAT (Voluntary or Mandatory):
- A Company / Other Entity. You need a Registered Pty Company (we can assist)
- A Business Bank Account.
- Invoice(s) to prove you are trading.
- Proof of Address in South Africa
Price: R2290 (All Inclusive)
Timeframe 1 Week
Our in-house Tax Practitioner, Jack Liebenberg, has over 30 years experience and is affiliated with:
Advantages to be VAT Registered:
1. Quoting / Invoicing. Many large Companies require that your Business must have a Vat Number on your Quotes or Invoices being sent to them.
2. Tenders and Contracts. To apply for Tenders and Contracts, you need a Vat number.
3. Listing as a Service Provider. To be listed as a Supplier or Service Provider
Our other SARS Services
|Tax Clearance||R 590|
|UIF / PAYE / SDL Registration||R 1 890|
|Import / Export License||R 2 450|
In this post, I will be discussing what VAT Registration is in South Africa, what the benefits are when you have to register and also the fastest way you can register for VAT in South Africa.
This post is for you if you have a business and you want to register for VAT as soon as possible, but you first want to clarify a few things you have on VAT registration and its benefits.
We usually work with various South African entrepreneurs and businesses and they all always have a few specific questions on VAT in South Africa to figure out how it applies to their businesses. So that’s why we’ve decided to answer a few of the most common questions.
8 Questions we’ll answer below on VAT Registration in South Africa
You can just scroll down to the question you’re interested in.
- What is VAT in South Africa?
- How is VAT relevant to my South African business?
- What happens if I don’t register for VAT?
- What is a Tax invoice and what should be on a Tax Invoice?
- What are the benefits of registering for VAT?
- What items can I claim VAT on in South Africa?
- Do I have to register for VAT?
- How do I register for VAT?
What is VAT in South Africa?
VAT is short for Value Added Tax. It’s tax calculated on the value that’s added to products and services by your business that’s due to SARS.
You’ll notice you pay 15% (that’s South Africa’s VAT rate) on various products. It’s visible on your proof of payment. That’s VAT.
Not all products and services have VAT and not all companies have to register for VAT. However, it does have its benefits to register for VAT.
If there’s VAT on a product that means, rather than paying 100% of the price, you’re paying 115%. That 15% goes to SARS and not the company you buy the product from.
You have to register at SARS in order to add VAT to your products/services, but also in order to claim it back from SARS. If you pay more VAT than you owe SARS, they will pay the difference to you.
It’s required by South African law that all companies who’s turnover (sales) is more than R1 million over 12 months register for VAT and add that to the total price of their products/services.
In the context of VAT registration, and growing your business, VAT specifically relates to the question of whether or not you should register for VAT.
How is VAT relevant to my South African business?
How VAT is relevant to you largely depends on what you sell or offer as a business, how much you earn and with whom you’re doing business with. It’s also important to consider who you’d like to do business with in the future.
If you’re buying from companies who add VAT, you’re paying VAT and you can’t claim that back from SARS unless you register for VAT. In other words, the VAT portion forms part of your input cost.
It’s important to note that if you earn less than R50 000 a year or R4200 per month (for at least two consecutive months), you cannot register for VAT yet.
That means VAT is only relevant to those roughly exceeding R50 000 turnover (sales) a year.
Also note that there is one instance you can recover VAT if your business isn’t registered yet, however that usually applies to international companies or tourists.
If you buy items in South Africa and you export it overseas, you might want to look into that.
Expert tip: If you have any other questions about VAT, don’t hesitate to book your FREE consultation with our experts by clicking HERE (it will all happen online or via email/phone, so there’s no need for you to come into our offices)
What happens if I don’t register for VAT?
Legally nothing bad happens if your turnover is less than R1 million over 12 months. Before you hit the R1 million-mark, registration is voluntary.
That means you get to evaluate if it will financially benefit you to register for VAT or not. Once your annual turnover (sales) is over R1 million, it’s a criminal offence not to be VAT registered.
You can face charges and/or penalties and interest on your due payments.
You have 21 days after you earn R1 million (in turnover over a 12-month period) to register.
What is a Tax invoice and what should be on a Tax invoice?
Essentially, a Tax invoice is simply a normal invoice that included the amount of VAT added to your total price. You have to be registered for VAT in order to add VAT to your prices. However, this can relate to other forms of Tax you have to add too, like for e.g. Securities Transfer Tax (these unique forms of Tax only apply to very specific businesses).
There are a few specific things you HAVE to have on your Tax Invoice. If you are Vat registered you can simply make sure the following information is on your normal invoice:
- Explicitly use and add the term “tax invoice” on your invoice.
- Make sure the full details of the supplier (so that would be your business) is on the invoice (name, address, and VAT registration number).
- Also make sure the full details of the receiver (your client) is on the invoice (name, address, and VAT registration number).
- A unique serialized Invoice number (that refers to the way your number your invoices in order and according to the date issued).
- The date.
- A good description of the supplies or services you offered.
- The quantity provided, so that refers to an exact number of products or hours of service you offered.
- The cost of these individual products and/or hourly rate plus the total amount.
- The amount of VAT added.
- The price including the VAT and the price excluding the VAT.
What are the benefits of registering for VAT?
The most significant benefit is the association. Companies who pay VAT, might prefer working with companies who charge VAT.
The other significant benefit is having the ability to deduct the VAT you pay when purchasing things for your business from the VAT amount you owe SARS in terms of Value Added Tax to your products.
What items can I claim VAT on in South Africa?
If you are registered for VAT, you owe VAT – that is the 15% you have to add to the cost of your products or services. You only need to add 15% if you are VAT registered.
That also means you can deduct the VAT you pay when you purchase certain items for your business. If the total you owe to SARS is less than the amount of VAT you’ve paid, SARS will pay the difference back to you.
You can usually deduct any VAT that’s charged on any item, product or asset that you specifically use for your business.
However, you generally cannot claim back VAT on items you purchase that are for entertainment purposes for e.g. membership or subscription service to clubs, associations, nature or any recreational or social clubs.
There are also various products and services, that despite hailing from large companies that should register for VAT in terms of their earnings, don’t have to add VAT to their products. They are either called zero-rate supplies or exemptions. The point is there is no VAT added so you cannot claim any VAT back on these items.
There are various reasons for these exemptions and zero-rate supplies. Most often it’s because the government feels these items are basic necessities and should be as affordable as possible to all South Africans.
Here’s a quick list of some items/service that does not have VAT added to their prices (so naturally that implies you can’t claim back any VAT):
- Financial Services
- Residential Accommodation
- Some forms of Education
- Some forms of Transport services
- Municipal Rates
- Some food and forms of fuel
- Some services provided by non-South African residents
- On some services provided outside South Africa
- International transportation of both items and people
Please note that other forms of taxation might apply to some of these items for e.g. Transfer Duty or Securities Transfer Tax.
Please note that the VAT law change from time to time, so please verify the above with your Accountant (or one of our Accountants).
Do I have to register for VAT?
You only HAVE to register for VAT if your turnover / sales is more than R 1 million over 12 months. South African law requires you to register for VAT in this instance.
You have to register for VAT within the first 21 days after you’ve hit that R1 million mark.
You CAN voluntarily register for VAT if your turnover (sales) is more than R50 000 a year or if you have invoices that show you’ve earned more than R4200 per month – this can be done through us.
So essentially VAT is voluntary for smaller companies and compulsory for large companies. The reason why it’s voluntary for smaller companies or businesses is simply that your benefit largely depends on the nature and size of your business.
If you buy from or sell to, or if you aim to buy from or sell to, VAT registered companies, registering for VAT might be a good idea. If not, you can focus on other aspects of your business and revisit the benefits of VAT registration once you do have the need to trade with VAT Registered companies.
When do I have to submit my VAT Return?
Usually VAT Returns need to be summitted every two months. However if you earn more than R30 million over 12 months, you need to submit yours every single month.
How do I register for VAT?
To register for VAT, you have to register at SARS or use a SARS-expert like ourselves to help you.
Your first option is filling out this VAT 101 – Application for Registration form and then submitting it at your local SARS branch.
An easier and faster way of making sure if you should register for VAT and getting it done ASAP (and most importantly correctly), is talking directly with one of our VAT Registration experts. Book your FREE consultation with our experts by clicking right HERE or contact us toll free on 0800 007 269.