Value added tax (VAT)

Value added tax (VAT)

Value Added Tax (VAT) was introduced on 30 September 1991 at 10% and increased to 14%  on 7 April 1993.

The VAT system comprises three types of supply

Standard-rated supplies – supplies of goods and services subject to the VAT rate in force at the time of supply

Exempt supplies – – supplies of goods and services subject to the VAT rate in force at the time of supply

Zero-rated supplies – supplies of certain goods or services subject to VAT at zero percent. The following are amongst others specifically zero-rated brown bread maize meal stamp mealie rice dried mealies dried beans lentils pilchards (excluding pet food or sardines supplied in tins) milk powder (unflavoured) dairy powder blend rice fresh vegetables (excluding canned bottled and dehydrated) fresh fruit vegetable oil used for cooking (excluding olive oil) milk including long-life milk (excluding condensed flavoured sweetened and evaporated milk) cultured milk brown wheaten flour raw eggs pod vegetables diesel petrol and illuminating paraffin. Export sales and services are zero-rated subject to specific requirements.

VAT input tax credits may in general not be claimed in respect of entertainment and sedan and double-cab type motor vehicles

All fee-based financial services are subject to VAT from 1 October 1996 with the exception of

premiums payable in respect of life policies issued in terms of the Insurance Act and contributions to pension provident retirement annuity and medical aid funds and

compulsory charges built into the selling price of units in unit trust schemes

 

REGISTRATION REQUIREMENTS

It is mandatory for a business to register for VAT if the income earned in any consecutive twelve month period exceeded or is likely to exceed R1 million. The business must complete a VAT 101 – Application for Registration form and submit it to the local SARS branch within 21 days from date of exceeding R1 million​.
A business may also choose to register voluntarily if the income earned, in the past twelve month period, exceeded R50 000.
The VAT 101 application for registration must be submitted in person at the SARS branch nearest to the place where your business is situated or carried on. A registered tax practitioner may appear in person on behalf of the applicant. SARS will not accept any faxed or photocopied applications for registration. Posted applications will only be processed if applicants are geographically far from the SARS branch or due to any form of disability and the applicant cannot physically present the application.
All supporting documents, as listed on the application form, must be submitted, otherwise there may be a delay in finalising the VAT registration.
A business may request SARS to cancel its VAT registration if the income earned a period of twelve months, falls below R1 million, or if all business activities have ceased. The business is required to complete the cancellation of registration form and submit the form to the local SARS branch.