It is mandatory for a business to register for VAT if the business’ turnover, in any consecutive twelve month period, exceeded or is likely to exceed R1 million. If the business have not yet reached the R1 million threshold it is not obligated to register for VAT. Such a business may opt for voluntary VAT registration.
Why should I register
There are numerous reasons why people register for VAT. The most reasons are:
- Mandatory registration
- Tender requirements
It is common practice for companies and government institutions to require proof of VAT registration because of the value of the tenders. Many tenders tend to exceed the threshold for mandatory VAT registration.
- Supplier discounts
Many companies require their customers to be VAT registered. Their intentions are to verify the nature of the business, in the case of agricultural enterprises, or to attain more credibility to the existence thereof before accepting a large order.
- VAT Refunds
Many companies opt to register voluntarily for VAT to qualify for VAT refunds. This trend is most popular amongst companies involved rendering zero rated supplies or services. Other businesses opt to register for VAT to recover the VAT they paid on supplies and overheads.
When should I register?
A business must register for VAT within 21 days from date of exceeding R1 million turnover. A business that want to register for VAT voluntarily may do so if the turnover, in the past twelve month period, exceeded R50 000.
Requirements for VAT registration
The following documents are required for VAT registration:
- Business tax number,
- Completed and signed VAT application form,
- Certified copies of business registration documents (COR14.1, COR14.1A, COR14.3, COR15.1A, CK2, Trust deed),
- Certified copies of identity documents of the two main directors / Members / Trustees,
- Original signed and stamped letter from bank confirming business bank details (no internet printouts)
- Certified copy of identity documents of the representative director / Member / Trustee,
- Recent original business municipal account or if the property is leased, a certified copy of the lease agreement,
- Recent original residential municipal account of the Individual or representative director / Member / Trustee,
- Copy of financial information listed as per part four of the application form to determine taxable supplies (no cash flow projections) (e.g. bank statements showing deposits and copies of invoices issued for last 3 months showing R 50,001 or more)
VAT registration procedure
Once all the above documents have been gathered it can be submitted at your nearest SARS Branch. The application must be done in person and cannot be mailed to SARS or dropped in the mailbox at a SARS branch.
How long does it take to register for VAT?
VAT registration takes place upon submission of the supporting documents.
Can I be deregistered?
A business’ VAT registration may be cancelled if certain requirements are met. The cancellation can be initiated either, by the business or the Commissioner.
A business may apply to the Commissioner to cancel its VAT registration if:
- the value of taxable supplies will be less than the compulsory registration threshold of R1 million in any consecutive period of 12 months, or
- the business has ceased to carry on all enterprises.
If the business has ceased to carry on all enterprises, the business must also state the date of cessation of the enterprises and whether it intends to carry on any enterprise within 12 months from date of cessation.
The Commissioner may cancel the VAT registration of a business if:
- the value of taxable supplies will be less than the voluntary registration threshold of R50 000 in any consecutive period of 12 months; or
- the business was registered under the voluntary registration category and –
- has no fixed place of business;
- doesn’t keep proper accounting records;
- does not have an active bank account registered in the name of the business; or
- the business failed to perform any duty imposed under the Act.
In the case where the business has ceased all enterprises, the cancellation normally takes effect from the last day of the tax period in which the business ceased to carry on all enterprises. In any other case, the Commissioner will decide the date of cancellation and final tax period for which a business is required to submit its VAT return.
The cancellation of your business’ registration cannot be finalised until all the outstanding liabilities and obligations in terms of the VAT Act have been resolved or settled.