What is Value Added Taxation?
Almost every time a consumer purchases goods or services from a business in South Africa, the consumer must pay a price that includes value-added tax.
VAT is a tax on the consumption of goods and services in South Africa.
VAT is levied in terms of the Value Added Tax Act 89 of 1991 and is currently levied at a rate of 15%.
Businesses registered for VAT is known as VAT vendor.
The business activities carried out by a VAT Vendor is known as an enterprise.
VAT vendors will charge VAT (Output VAT) on the supply of goods and services made by it in its enterprise, on the importation of goods, and on imported services (subject to certain conditions).
VAT Vendors will also be able to claim VAT back on the goods and services acquired by them to make taxable supplies in their enterprise, subject to specific rules and regulations.
VAT is therefore charged at each stage of the production and distribution phase, and it is proportional to the price charged for the goods.
Who needs to register for VAT?
Any person that carries on an enterprise, as defined in section 1(1) of the VAT Act 89 of 1991, may qualify to register for VAT.
It is compulsory to register for VAT if the taxable supplies made exceed R 1 million in a consecutive 12-month period.
A person can also voluntarily register for VAT under certain conditions.
When should I submit VAT returns and make VAT payments?
Each VAT Vendor will be allocated a specific VAT period once the company is registered for VAT.
A VAT vendor is required to submit VAT returns and make payments on or before the 25th of the month following the month in which the vendor’s tax period ends.
If the 25th day is not a business day, then returns must be submitted on the last business day preceding the 25th.
Always avoid late VAT submissions and payments as it will attract fines and penalties.
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