If your business earns more than R1 million in a 12-month period, you’re legally required to register for Value Added Tax (VAT). VAT compliance might seem intimidating, but understanding the requirements and staying on top of submissions can save your business from unnecessary penalties and keep your operations running smoothly. Let’s break it down.
What is VAT Compliance?
VAT is a consumption tax applied to most goods and services sold in South Africa. Businesses collect VAT on behalf of SARS when they sell goods or services and, in turn, claim VAT back on business-related purchases. Staying VAT-compliant means registering with SARS, submitting VAT returns, and paying any VAT owed within the specified deadlines.
Who Needs to Register for VAT?
- Compulsory Registration: If your turnover exceeds R1 million in a 12-month period, you must register.
- Voluntary Registration: If your turnover is between R50,000 and R1 million in a 12-month period, you may choose to register.
Steps to Comply with VAT
- Register for VAT with SARS: Complete the VAT101 form via eFiling or visit a SARS branch with the necessary documentation.
- Charge VAT: Include VAT (currently at 15%) on your invoices for taxable supplies.
- Keep Records: Maintain accurate records of sales and purchases, including VAT invoices and receipts.
- Submit VAT Returns: File your VAT201 return every two months or as specified by SARS.
- Pay VAT on Time: Ensure VAT payments reach SARS by the due date.
What You Need to File VAT Returns
- Purchase invoices (for input tax. Input tax is tax you can claim)
- Sales invoices (for output tax. Output is tax you must pay)
- Bank statements
- VAT calculation schedule
- Access to SARS e-Filing for submitting returns.
When to File VAT Returns
Most businesses submit VAT returns bi-monthly, every two months. Your specific submission dates depend on the category SARS places you in when you register. Always double-check your deadlines to avoid penalties. There are 5 categories of VAT periods: Some businesses submit every month, two months, six months, and some once a year..
What Will Happen If You Fail to Register or File For VAT
Failing to register, file returns, or pay VAT on time can result in penalties, interest, and audits by SARS. Beyond the financial impact, non-compliance could harm your business’s reputation. And SARS can register you automatically and backdate your filing to when you started qualifying for registration.
Stay VAT-Compliant Without the Stress
Understanding and managing VAT compliance is crucial for your business’s success.
Need help with VAT registration or filing returns?
Contact us today, and let’s simplify VAT compliance together! Email: inquiries@nextgee.co.za | Call or WhatsApp 081 435 4234
