You’ve started a small business and things are going well. Better than you expected, in fact. You’re making money and are delighted with your progress, celebrating as your turnover inches past R100 000, R200 000 and eventually R300 000 within a couple of months. It’s every start-up business owner’s dream, and nothing should mar your enjoyment of success – provided you are aware of your tax obligations.
According to the SA Revenue Service (SARS), a business owner/taxpayer is defined in this way: “Any person who carries on an enterprise and whose total value of taxable supplies (taxable turnover) exceeds, or is likely to exceed, R300 000 in any 12-month period, must register for VAT.”
From the date that your business exceeds the R300 000 turnover mark – that is, from the date of liability – you have 21 days to register. And if you reasonably expect it to exceed this amount, you also need to register. So, if your business is fast approaching the R300 000 mark and you are still within the 12-month period, be aware of your pending liability.
This type of VAT registration is compulsory. You can also register for VAT voluntarily in certain instances if the taxable supplies of your enterprise exceed R20 000 in a 12-month period. Being registered necessarily adds another administrative load to your business, but it does mean that you can claim back VAT in certain instances.
For compulsory VAT registration, you need to complete a VAT 101 form and submit it to your local SARS office, along with the required documentation, a list of which can be obtained off the SARS website. In theory, the application should take 21 working days, but it can take a lot longer if there are problems with documentation. Submitting the incorrect documents with your registration can lead to seemingly endless delays in obtaining your VAT registration number, and for this reason it is often wise to make use of the services of a tax consultant.
If you decide to send the application in yourself, be proactive. Follow up with SARS to check what stage your application is at. Ask if there are any problems and whether you need to send them any further documentation. If you don’t follow up and there is a problem, there’s a chance SARS will simply mail the application back to you and you’ll have to start the process all over again.
You can check if your registration has been processed by entering your details under “VAT vendor search” on the SARS website. The website states: “SARS employees are not allowed to advise you verbally of your VAT number. If you have not yet received your certificate and require some proof of registration, you can request the local branch office to give you a letter confirming this fact.”
SARS suggests that you allow at least 10 working days for the local branch office to process your documents. They will post the certificate to the postal address given on your registration application within two weeks of your application being processed. For more information, visit www.sars.gov.za
New VAT Legislation
The new amendment to the Act, Section 20 (4), states that the following information must be given on all tax invoices:
- The words “tax invoice” must appear prominently on the invoice
- The name and address of the supplier must be given
- The VAT registration number of the supplier must be given, if the supplier is VAT registered
- The name and address of the recipient must be given
- The VAT registration number of the recipient must be given, if the recipient is VAT registered
- The invoice must have an original, serialised number and clearly show the date on which it was issued
- A full description of the goods or services supplied must be given
- The quantity and/or volume of the goods supplied must be given
- Where VAT is exclusive, the VAT amount must be indicated separately
- Where VAT is included in the total, the amount of the tax charged must be reflected, or a statement that VAT is included and the percentage at which it is included must be reflected