Who should register for VAT?
A person can only register for VAT if they are carrying on an enterprise. A “person” is defined in the VAT Act and includes, but is not limited to, an individual, company, partnership, trust fund and a municipality.
“Enterprise” is a defined term in the VAT Act. It includes any activity carried on continuously or regularly by any person in or partly in South Africa where goods or services are supplied to another person for a consideration, whether or not for profit. Anything done to start or terminate an enterprise is also included as conducting an enterprise for VAT purposes.
The activities or supplies of the following persons are specifically included in the definition of “enterprise”:
- Public authorities as notified by the Commissioner.
- Welfare organisations.
- Share block companies (subject to certain conditions).
- Implementing agency of a foreign donor funded project.
- Intermediaries and non-resident suppliers of electronic services.
The following are some examples of when you are not regarded as carrying on an “enterprise”:
- Making exempt supplies, for example, the supply of financial services, residential accommodation, public transport, etc. Refer to the VAT 404 Guide for Vendors for more detailed information in this regard.
- An employee earning a salary or wage from an employer (excluding an independent contractor). Note that a non-executive director of a company is considered to be an independent contractor and not an employee.
- Hobbies or any private recreational pursuits not conducted in the form of a business.
- Private occasional transactions, for example, the sale of domestic/household goods, personal effects or a private motor vehicle.
- Supplying “commercial accommodation” in circumstances where the total value of those supplies made or reasonably expected to be made does not exceed R120 000 in any consecutive period of 12 months.
It is compulsory for a person to register for VAT if the value of taxable supplies made or to be made, is in excess of R1million in any consecutive 12 month period.
Voluntary registration is possible under certain circumstances.
When must a person register for VAT?
A person may register for VAT if they are carrying on an enterprise in or partly in the Republic where goods or services are supplied for a consideration. It is compulsory for a person to register for VAT under the following circumstances:
- where the value of taxable supplies made in any consecutive 12 month period exceeded or is likely to exceed R1 million; or
- where in terms of a written contractual obligation, the value of taxable supplies to be made in a 12 month period will exceed R1 million.
An application for a compulsory VAT registration must be made within 21 business days from the date the R1 million is or will be exceeded.
Non-resident suppliers of certain electronic services are also liable for compulsory VAT registration at the end of the month in which the total value of taxable supplies exceeds R1 million. An intermediary is also allowed to register and account for VAT on behalf of supplies made by the non-resident supplier of electronic services. For more detailed information see the VAT-Reg-02-G02 Guide on Foreign Suppliers of Electronic Services and the VAT Frequently Asked Questions for the Supplies of Electronic Services.
A person may also choose to register voluntary for VAT if the value of taxable supplies made or to be made is less than R1 million but has, under certain circumstances, exceeded R50 000 in the past period of 12 months.
A voluntary registration may be applied for by the following persons or under the following circumstances, although the minimum registration threshold of R50 000 has not yet been made:
- Welfare Organisations;
- Acquisition of a business as a going concern;
- The person meets the requirements and conditions listed in General Notice R447 as published in Government Gazette No. 38836 dated 29 May 2015 (the Voluntary Registration Regulation); and
- The person carries on the specific nature of activity listed in General Notice R446 as Published in Government Gazette No. 38836 dated 29 May 2015 (the Nature of Activity Regulation).
Listed activities in the Nature of Activity Regulation include the following:
- Agriculture, Farming, Forestry and Fisheries
- Ship and aircraft building
- Manufacture or assembly of plant, machinery, motor vehicles or locomotives
- Property development
- Infrastructure development
The requirements listed under the Voluntary Registration Regulation are as follows:
- Taxable supplies made for 1 month:
- Where taxable supplies have been made for only 1 month preceding the date of application, the value for that month must have exceeded R4 200;
- Taxable supplies made for 2 months or more:
- Where the average value of taxable supplies made in the months preceding the date of application, exceeded R4 200 per month;
- The average is calculated using a minimum of 2 months and a maximum of 11 months prior to date of application.
- Written contracts:
- Where taxable supplies exceeding R50 000 in the 12 months following the date of registration must be made;
- Expenses incurred or to be incurred for commencement or continuing an enterprise; or
- capital goods acquired in connection with commencement of the enterprise; and
- Payment or any extended payment agreement where:
- as at registration application date, payment has exceeded R50 000; or
- in any consecutive 12 month period commencing before and ending after registration application date, payment will exceed R50 000; or
- in the 12 months following registration application date, payment will exceed R50 000
- Finance Agreement:
- Financial agreement with a registered bank; or
- Credit agreement with a credit provider as per National Credit Act; or
- Agreement with a designated entity, public authority or other person who continuously or regularly provides finance; or
- Financial agreement with a non-resident; and
- The total repayment in the 12 months following registration application date must exceed R50 000
In addition, there are other general requirements that must also be met for a voluntary registration for VAT. Refer to the VAT 404 Guide for Vendors in this regard.
How does the VAT liability date work?
- Voluntary VAT registrations:
- The VAT liability date will be set according to the date of application. The backdating of a voluntary registration is not allowed. If you want to backdate your voluntary registration application, you must provide SARS with the necessary supporting documents to justify the backdating request.
- Compulsory VAT registrations:
- The SARS eFiling (RAV01) system only allows backdating up to 6 months from the date the compulsory registration threshold of R1 million was exceeded. If the backdating is more than 6 months from the date the compulsory registration threshold was exceeded, please make an appointment to visit a SARS branch with the necessary supporting documents such as financial statements, signed contracts or invoices issued, etc.
Please note: The VAT liability date must not be prior to 01 September 1991 and not more than 3 months in the future.
How to Register for VAT
The VAT Registration application must be made through one of the following channels:
- eFiling; or
- Make a virtual appointment via our eBooking system by selecting the following options:
- Appointment channel: Telephonic engagement or Video
- Reason category: Other
- Reason for appointment: VAT registration
It is important that you submit the correct documents with your VAT registration application. Failure to do so will result in a delay in processing the application. The prescribed supporting documents can be submitted through eFiling, SARS website online query system or walk-in channel, the latter is by appointment only. For more information, see the VAT-Reg-02-G01- Guide for Completion of the VAT Application.
Immediate allocation of a new VAT registration number upon application
Where no risk is identified, SARS will issue a VAT reference number immediately.
How to register for VAT on eFiling
Follow the easy steps below to register for VAT on eFiling:
Create or logon to your eFiling profile
Navigate to SARS Registered Details functionality:
- On the Individual portfolio, select Home to find the SARS Registered Details functionality on the left menu
- On the Tax Practitioner and Organisations eFiling portfolio, the SARS Registered Details functionality is under the Organisations menu tab
Select Maintain SARS Registered Details on the left menu
The Maintain SARS Registered Details screen will display. Select I Agree to confirm that you are authorised to perform maintenance functions of the registered details of the vendor.
Select VAT under My tax products > Revenue on the left menu
Select Add new product registration to register new or additional VAT branch registration
Complete the following in the VAT container:
- Registered particulars, if not pre-populated
- Trading As name, where applicable
- Liability Date
- Select Business Activity Code
- The codes may be obtained in the VAT 403 Vendors and Employers Trade Classification Guide
- Select Farming Activity Code, if applicable
- Note:If you select a different business activity code after you have received the containers for Diesel concession, you will receive the following error: ‘Mark here if you derive farming income in addition to your main business activity income: If you select this indicator, the “Farming Activity Code” field will be mandatory.
- Select relevant registration option
- Value of taxable supplies
- Accounting basis
- Tax period
- The following fields if not pre-populated:
- Contact details
- Physical Address
- Postal Address
- Banking details
VAT vendors can also request and obtain a VAT Notice of Registration on eFiling – there are 2 options:
- The short cut:
- Logon your eFiling profile; and
- Click on the Notice of Registration icon on the top right-hand side of the home screen; or
- Follow these easy steps:
- Logon your eFiling profile;
- click SARS Registered details on the side menu;
- Select Notice of Registration; and
- Select VAT
GEN-ELEC-04-G01 – Guide for completing the Value Added Tax VAT201 Declaration – External Guide
GEN-REG-01-G04 – How to Complete the Registration Amendments and Verification Form RAV01 – External Guide
LAPD-IT-G30 – Guide on venture capital companies
LAPD-TT-G01 – Tax Guide for Micro Businesses
VAT-ELEC-01-G01 – Manage Value Added Tax on Imported Services – External Guide
VAT-REG-02-G01 – Guide for Completion of VAT Application – External Guide
VAT101 – Value Added Tax Registration Application – External form
VAT102 – Application for separate registration VAT – External form
VAT102DIP – Application for Separate Registration of Offices of International Organisations – External Form
VAT123D – Application for the Cancellation of Diesel Registration of a Person – External Form
VAT123T – Application for Cancellation of a Separately Registered Enterprise – External Form
VAT215 – Record in respect of Imported Services – External Form