What is VAT in South Africa?
VAT is the acronym for Value-Added Tax. It represents a subsidiary tax charged on the purchase of items and services that have a long run effect on the economy. Some form of income known as revenue is acquired for governmental use through tax. This is accomplished by demanding that a business, that is recognized as an enterprise (as defined in section 1(1) of the VAT Act), to register for VAT. As a result, the business will impose VAT charges on the supplies of goods and services it manufactures.
Enterprises That Impose VAT Charges
Such an enterprise also has the capacity to subtract any VAT that it is charged, or in rare occasions, from a company unregistered for VAT, in consideration of supply it receives. VAT is non-cumulative, which can be interpreted that a credit/deduction is acceptable for VAT paid in prior stages, along the production and distribution chain. The company is mandated to pay the variance between the VAT charged by it and the VAT charged to it, or lay claim to a VAT reimbursement where the VAT charged to it surpasses the VAT charged by it.So for every point in the production and distribution stage, the VAT that is charged on each of these stages is translated to the VAT charged on the final goods and services to the consumer.
Is VAT A Requirement?
VAT is a requirement in South Africa for a company or enterprise if the taxable supplies it receives racks up a bill of at least R1, 000,000 for any continuous yearly period. It is however possible for a company or enterprise to register for VAT without meeting this requirement, but this is voluntary and not a stern rule.
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In the case of willful registration for VAT, there are few categories that can be spoken of;
When Are VAT Payments Supposed To Be Made?
VAT payments are set to be paid before the 25th or last business day of the month. Failure to pay VAT at the stipulated time tends to attract sanctions.VAT related publications in South Africa can be accessed on the SARS website. It must however be noted that old or removed documents cannot be found here.
