Streamlining the VAT registration process
By Graeme Saggers, Nolands SA
With effect on 1 April 2014, South Africa has amended sections of the Value Added Tax Act in an attempt to clarify and streamline certain registration requirements.
Registration for VAT in South Africa is either compulsory or voluntary. Businesses are required to register for VAT when their turnover is greater than ZAR 1 million per year but they may voluntarily register for VAT when their turnover is less than ZAR 1 million but greater than ZAR 50,000 a year. The confusion regarding the timing of the ZAR 1 million compulsory registration threshold has now been clarified and compulsory registration will only be required when businesses have reached the threshold in the preceding 12 months or have a written contractual commitment which means they will reach it in the next 12 months.
For voluntary registration, businesses must currently prove that they have made taxable supplies of at least ZAR 50,000. This creates a chicken and egg situation as businesses need to register to trade but cannot register until they have proof of trading. The legislation has been amended such that it allows businesses who can reasonably be expected to make taxable supplies of at least ZAR 50,000 in the next 12-month period to register voluntarily. This Option requires that businesses administer their VAT on the cash basis as opposed to the accrual basis until such time as they reach the ZAR 50,000 threshold.
It is hoped that the removal of subjective requirements from registration will streamline the process, which can help save time, money and stress and therefore truly add value to value-added tax.
Nolands SA, Cape Town, South Africa
T: +27 21 658 6600
Graeme Saggers CA (SA), BCom (Nom). Graeme is the Tax Director of Nolands Advisory Services Africa, which is the advisory division of the firm of Nolands. Nolands is a top ten audit, advisory and tax firm in South Africa and is a member of Geneva Group International. Graeme gained a Bachelor of Commerce and Honours in Accounting at Rhodes University and, after qualifying as a Chartered Accountant (South Africa), he joined Nolands where he is now head of the Tax Department.
Nolands SA is a national auditing firm, located in 10 offices in including all major centres in South Africa and Mauritius, employing almost 200 people focussed on providing the best possible solutions for its clients. Nolands prides itself on being "not ordinary" and in its ability to integrate services and respond rapidly to clients' needs.
published: May 2014