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VAT Guidelines 2010

VAT Guidelines 2010

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Published by: erostyles on Oct 13, 2010
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VAT 404 Guide for Vendors 10 Important Principles
10 IMPORTANT PRINCIPLES
1. All prices charged, advertised or quoted by a vendor must include VAT at theapplicable rate.
(Presently 14% for standard rated supplies).
2. Vendors collect VAT on behalf of the State
– please make sure that you pay it over ontime, otherwise penalties and interest will be charged.
3.
VAT charged on supplies made (output tax)
less 
VAT paid to your suppliers (input tax) = theamount of 
VAT payable/refundable
.
4.
You need a
valid tax invoice
with your 
VAT number indicated
on it as proof of any input taxclaims which you want to make. You must also keep
records
of all your tax invoices andother records of transactions for 
at least
 
five (5) years
.
5. Goods exported
to clients in an export country are charged with VAT at 0%. However, if delivery takes place in RSA, you must charge VAT at 14% to your client. If your client is avendor, the VAT charged may be claimed as input tax. If your client is not a vendor, and thegoods are subsequently removed from the country, a refund claim may be lodged at the pointof exit.
6. You may not register for VAT
 
or claim any input tax
on goods or services acquired tomake
exempt supplies or for private use or other non-taxable purposes
. Also, as ageneral rule,
input tax may not be claimed
where the expense incurred is for the acquisitionof a
motor car
or 
entertainment
, even if utilised for making taxable supplies.
7.
You are required to
advise
 
the South African Revenue Service (SARS) within 21 days ofany changes in your registered particulars,
including any change in your authorisedrepresentative, business address, banking details, trading name, or if you cease trading.
8.
If you have
underpaid VAT
 
as a result of a
 
mistake
,
report it to your SARS branch office
 as soon as possible, rather than leaving it for the SARS auditors to detect.
9.
You can
pay your VAT by using various electronic methods
, including e-filing, internetbanking, debit order and electronic funds transfer (EFT). You may also pay at any of the four major banks instead of carrying cash to your local SARS cash office.
10. Report fraudulent activities
to SARS by calling the
toll-free number 0800 00 2870
. Youmay report an incident anonymously if you wish.
1
 
VAT 404 Guide for Vendors Foreword
FOREWORD
The VAT 404 is a basic guide where technical and legal terminology has been avoided wherever possible.Although fairly comprehensive, the guide does not deal with all the legal detail associated with VAT and is notintended for legal reference.All references to “the VAT Act” or “the Act” are to the Value-Added Tax Act, 1991 unless the context otherwiseindicates. The terms “Republic”, “South Africa” or the abbreviation “RSA”, are used interchangeably in thisdocument as a reference to the sovereign territory of the Republic of South Africa, as set out in the definitionof “Republic” in section 1 of the VAT Act. You will also find a number of specific terms used throughout theguide which are defined in the Value–Added Tax Act, 1991 and listed in
Chapter 19 
in a simplified form for easy reference.The information in this guide is based on the VAT legislation (as amended) as at the time of publishing andincludes the amendments contained in theRevenue Laws Amendment Act (Act No 60 of 2008)and theRevenue Laws Second Amendment Act (Act No 61 of 2008), both of which were promulgated on8 January 2009 (as per 
GG 31781
and
GG 31782 
respectively).Below is a brief synopsis of some of the most important changes since the previous issue of this Guide:
1.
Increase in compulsory VAT registration threshold 
 
 – The previous threshold of R300 000 for compulsory VAT registration increased to R1 million from 1 March 2009. The VAT payable uponderegistration for vendors opting out of voluntary registration for VAT may be paid in six equalmonthly instalments or in so many monthly instalments as the Commissioner may allow.
2.
Micro businesses 
 
 – The increase in the VAT registration threshold coincides with the introduction of a simplified tax system for micro businesses (Turnover Tax) as an alternative to the current incometax and VAT systems. Micro businesses may therefore choose between the normal VAT rules, or toderegister for VAT and to participate in the new tax regime. To encourage participation in the new taxregime, provision was made for the value of assets upon deregisteration for VAT to be reduced by upto R100 000 and for the VAT upon deregistration to be paid off over six months in equal monthlyinstalments without incurring penalty and interest. Various other provisions were also introduced or amended as a consequence of the introduction of this new tax regime.
1
3.
Land reform and land restitution transactions 
– Certain supplies of fixed property are subject toVAT at the zero rate to the extent that the property is paid for by the Department of Land Affairs interms of the Provision of Land Assistance Act, 1993 and the Restitution of Land Rights Act, 1994.These properties are excluded from the definition of “
second hand goods 
” and therefore a notionalinput tax deduction may not be claimed if the property is applied for taxable supplies.
4.
Sale of imported goods in storage warehouses 
 
 – The supply of any imported goods stored in alicensed Customs and Excise storage warehouse, before being entered for home consumption issubject to VAT at the zero rate. Non-residents now have an option to be exempt from VAT, or toregister and charge VAT at the zero rate on these transactions. Certain transactions involving thesupply of goods by an inbound duty and tax free shop are also zero-rated.
5.
Refunds, interest and banking details 
 
 – Only non-resident companies may request that VATrefunds be paid into a bank account of a nominated person. However, in the case of an RSAsubsidiary company or holding company, VAT refunds may be paid into the bank account of either thesubsidiary company or holding company, on condition that SARS is indemnified against any losswhich may occur. The 21-day interest free period for VAT refunds will only commence from the datethat the vendor’s updated banking particulars have been received by SARS.
1
 
For detailed information on Turnover Tax, refer to the Comprehensive Guide to Turnover Tax and the the Revenue Laws Amendment Act, 2008 which are available on the SARS website 
.
 
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