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VAT (Value Added Tax) Returns Explained

VAT (Value Added Tax) Returns Explained

For many companies needing to register for VAT, professional accountants can be consulted to assist with all aspects of the VAT process, from registration to returns. VAT is summarised as a destination based tax relating to the consumption of goods and services within South Africa. VAT is paid on the supply of these goods and services within the country, as well as goods and services that are imported into the country. In order to submit VAT returns, companies first need to register with SARS.
Some factors to consider in regards to VAT returns include the following:

  • Persons or companies who produce taxable supplies or services in excess of R1 million over the course of any 12-month consecutive period are liable for compulsory VAT registration. These persons are referred to as vendors.
  • VAT payments are done through a range of channels including post, SARS branches, EFT, debit orders, eFiling or banks.
  • VAT returns are done by completing the required form, which is the VAT201 form given by SARS. Vendors can request this form during registration, and professional accountants can assist when completing this form.
  • On registering, vendors will be given a VAT vendor number that needs to be included on all VAT returns. If vendors have not submitted a return in the past five years, or those whose VAT201 returns for the last 12 months reflect a liability of zero, then vendors are liable for suspension of VAT services.
  • VAT returns must be submitted within 25 days of the end of each VAT cycle, or the vendor can face penalties and interest on late compliance. Penalties are 10% of the amount payable while interest is levied at a standard interest charge.
  • Vendors with an annual turnover of less than R 1.5 million must submit VAT returns every four months. However, they may have the choice to stay on the two-monthly return cycle.
  • Vendors will also have to keep all financial records for a period of five years from the date of the last entry in any book, as SARS can ask to see these records at any point during this time frame. Professional accountants will be able to assist in the management of financials over any time frame, which makes it easier to keep records accurately.