What is VAT?

VAT refers to value added tax paid on products. Output VAT is the tax on products sold and input VAT is the tax on products bought.

Compulsory registration

All companies should register for VAT as soon as their turnover exceeds R1m for a period of 12 consecutive months.

Voluntary registration

Companies are allowed to register for VAT if the turnover has exceeded R50 000 during the past 12 months, or is likely to exceed R50 000 in the 12 months following registration.

Companies can also register if the turnover for the month preceding the registration date exceeded R4 200. Or where the average over a period of 2 to 11 months was R4 200.

Companies are also allowed to register for VAT if the turnover is expected to exceed R50 000 in the 12 months after the VAT registration date. In this case, proof must be supplied to SARS in the form of a written contract with a customer.

Registration can also be done when the expenses exceeded R50 000 in the 12 months preceding the registration or is expected to exceed R50 000 in the 12 months after registration.

Another instance where a company can register for VAT is when a company enters into a finance agreement or credit agreement with a company that is registered under the NCR.

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It is important to note that if you want to register for VAT, you will have to have proof that your business meets any of the requirements as mentioned above. The turnaround time for a VAT registration at SARS is 21 business days.

If you need professional assistance to register your company for VAT, click here.