What is VAT?

VAT is an indirect tax charged on consumption of goods and services.

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.

VAT is levied on the supply of most goods and services and on the importation of goods. The VAT on importation of goods is collected by customs. There is a limited range of goods and services which are subject to zero rated VAT or exempt from VAT.

When should I register for VAT?

Before you register, you must carry on an enterprise and you must meet either the compulsory or the voluntary monetary registration threshold requirements.

Carrying on an enterprise means a person that carries on activities on a regular/continuous basis in RSA where goods / services are supplied for a consideration.

A person may voluntarily register for VAT where the person has already made taxable supplies exceeding R50 000 in a 12 month period, or where the person carries on an enterprise and has not yet exceeded the R50 000 threshold, but reasonably expects that the R50 000 threshold will be exceeded within 12 months from the date of registration.

However, it is mandatory for a person to register for VAT when the taxable supplies made or to be made, is in excess of R1m in any consecutive 12-month period.