VAT Refunds for vendors

What is a VAT refund?

A VAT refund is an amount of VAT that is payable by SARS to a vendor, where:

  • the total amount of VAT charged to the vendor on the acquisition of goods and services and on the importation of goods (and which are allowed as a deduction) exceeds the total amount of VAT charged on the supply of goods or services by the vendor, for a particular tax period (referred to as a VAT refund on a return), or
  • a vendor has paid an amount of VAT, in excess of the amount that should have been paid to SARS (referred to as an erroneous overpayment).

How do VAT refunds for vendors work?

If a vendor is entitled to a VAT refund on a return, SARS is required to pay that VAT refund within 21 business days of receiving the correctly completed VAT return in respect of that refund, without incurring any interest payable to the vendor.

SARS may withhold payment of a refund in the following circumstances:

  • SARS is satisfied that a refund claimed will be refunded by the vendor to another party where that vendor’s output tax is borne by that other party;
  • the vendor has provided banking details
  • a verification, inspection or audit of the refund has been finalised, unless acceptable security has been provided
  • all VAT returns have been submitted.


If the VAT refund is not paid within 21 business days, SARS will have to pay interest, at the prescribed rate, on the amount that is refundable. SARS may, under certain circumstances, re-calculate or suspend the 21 business day period, in which case interest is not payable, unless the 21 business day period which has been re-calculated or suspended, lapses.

The 21 business day period will be suspended where SARS is unable to gain access to books and records of the vendor. In this instance, the 21 business day period is put on hold from the date the request for access is sent to the vendor to the date the vendor allows access to such books and records.

The 21 business day period will be re-calculation under the following circumstances:

  • where the VAT return is defective;
  • information has come to the attention of SARS in respect of the disclosures made on the VAT return;
  • banking details are incorrect (whether it be that of the vendor or a third party bank account);
  • representative vendor has not been appointed or bank account has not be furnished (this applies to a non-resident registered business); or
  • tax obligations, in respect of returns have not been met.

If a refund is due as a result of an erroneous overpayment, the vendor must within 90 days of making the claim provide SARS with their banking details for the claim to be valid.

If a vendor has an outstanding debt, a VAT refund will set-off against that debt and any balance will be payable to the vendor. The vendor will be notified if set-off has been applied.

The VAT refund on a return must be claimed within five years from the date the VAT return was due and an erroneous overpayment must be claimed within 5 years from the date of the overpayment.  

May a vendor object or appeal when SARS does not authorise a VAT refund?

A vendor can object to or appeal a decision by SARS not to authorise a VAT refund. Vendors that are selected for further verification of their refund claims will be requested to submit supporting documents.

Vendors that are registered for eFiling can make use of the Refund Dashboard to view the status of their VAT refund.

Top Tip: Due to the risk of VAT fraud, the use of third party banking details will only  be permitted in two instances, firstly, where the vendor is a foreign company and secondly, where the vendor falls within the ambits of a “group of companies” (i.e. the vendor is either a subsidiary company or a holding company). In both cases, the vendor must supply the necessary authority from the account holder (for example, company resolution) and indemnify SARS against possible losses for any amount that is paid into the third party bank account. The vendor is required to complete a VAT119i form for this purpose.

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