What is VAT?
VAT is an abbreviation for value-added tax. It is an indirect tax on the consumption of goods and services in the economy. Revenue is raised for government by requiring certain businesses to register and to charge VAT on the supply of goods and services. These businesses become vendors that act as the agent for government in collecting the VAT.
VAT is presently levied at the standard rate of 14% on the supply of most goods and services and on the importation of goods. There is a limited range of goods and services which are subject to VAT at the zero rate or are exempt from VAT. The VAT on the importation of goods by any person is collected by customs.
VAT is charged at each stage of the production and distribution process and it is proportional to the price charged for the goods and services.
Who is it for?
It is mandatory for a business that earned income, in excess of R1 million in any consecutive twelve month period to register for VAT. The business must complete a VAT 101 – Application for Registration form and submit it to the local SARS branch? within 21 days from date of exceeding R1 million.
A business may also choose to register voluntarily if the income earned, in the past twelve month period, exceeded
R50 000.
R50 000.