VAT Registration & Deregistration

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three stacks of coins with scrabble tiles stacked on them to spell out VATWho Should Register for VAT?

Any person that carries on business may register for VAT. You can register once for all different tax types using the client information system. The term person is not only limited to companies but also includes, amongst others, individuals, partnerships, trust funds, foreign donor-funded projects and municipalities. In order to register, an application form must be completed, and a specific process must be followed, both of which you can find on our page how to register for VAT.

It is mandatory for a person to register for VAT if the taxable supplies made or to be made is, more than RI million in any consecutive twelve-month period.

A person may also choose to register voluntarily if the taxable supplies made, in the past period of twelve months, exceeded 50 000. As from the 1st of March 2012, qualifying micro-businesses that are registered for Turnover Tax may also choose to register for VAT provided that all the conditions for voluntarily VAT registration are met. A person who is obliged to register for VAT is referred to as a vendor.

Required Documents for VAT Registration:

  • RAVOI Form
  • VATIOI Form
  • Copy of director’s ID
  • Copy of certificate of incorporation
  • Proof of residential for business
  • Proof of residential for director
  • Invoices totalling R50 000 / Invoices close to R1 000 000
  • POA-Power of Attorney
  • Appointment letter as a public officer

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Who can Cancel a VAT Registration?

The cancellation of VAT registration can be initiated by the vendor or the Commissioner.

Where a vendor initiates the cancellation of the VAT registration, the vendor must apply to the Commissioner if –

  • the value of taxable supplies will be less than the compulsory registration threshold of RI million in any consecutive period of 12 months, or
  • the vendor has ceased to carry on all enterprises.

If the vendor has ceased to carry on all enterprises, the vendor must also state the date of cessation of the enterprises and whether it intends to carry on any enterprise within 12 months from date of cessation.

Where the Commissioner initiates a cancellation of a vendor’s VAT, registration, The Commissioner must be satisfied with any of the circumstances listed –

  • the value of taxable supplies will be less than the compulsory or the voluntary registration threshold (whichever is applicable) in any consecutive period of 12 months;
  • the vendor has failed to furnish a return that is required for purposes of calculating the tax, or
  • the vendor was registered under the voluntary registration category and has not fixed a place of abode or business; o does not keep proper accounting records, or has not opened a bank account in respect of the enterprise; or was previously registered as under the VAT Act or Sales Tax Act and failed to perform any duty imposed under those Acts.

In the case where the vendor has ceased all enterprises, the cancellation normally takes effect from the last day of the tax period in which the vendor ceased to carry on all enterprises. However, the Commissioner may determine the effective date to be another date.

Top Tip: SARS cannot finalise your cancellation of registration as a VAT vendor until all the outstanding liabilities and obligations in terms of the VAT Act have been resolved or settled.

What is the Process of Cancelling a VAT Registration?

A vendor that intends canceling a VAT registration must obtain, complete and submit the VAT 123e – Application for the cancellation of registration of a person in respect of all his enterprises form.

  1. The VAT123e must be submitted to the SARS branch where the vendor is registered. The circumstance that gives rise to ‘the cancellation must be clearly stated on the VA Tl 23e or in a separate letter attached thereto.
  2. The Commissioner will issue a letter of acknowledgment which will also inform the vendor of the date on which the cancellation takes effect and the final tax period.
    1. The letter of acknowledgment may provide further instructions regarding the cancellation process. The vendor must continue to charge VAT on supplies made and account for output tax and deduct any input tax up to the last day of the final tax period as was advised by the Commissioner.
  3. In respect of the final tax period (as indicated by the Commissioner), the vendor must declare output tax in field IA of that VAT return.

Exit VAT (being the output tax on assets on hand at the date of cessation) must

be declared together with any other output tax and input tax for that final tax

The period in that VAT return.

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