You know you must register for Vat. But do you know your legal obligation after you register?

Simangele Mzizi, Fsp Business, 31 Dec. 2014

Tags: register for vat, how to register for vat, vat registration, vat returns, submitting vat returns

You know that you must register for Vat using your VAT101 form if:

• You reach the R1 million turnover threshold in any 12 month period;
• Your business is non-resident and you supply goods or services in SA and your supplies exceed R1 million;
• Your business is non-resident and supplies electronic services valued at more than R50 000 in a 12-month period, and
• Your business’s taxable turnover exceeds R50 000 over a 12 month period (voluntary registration.)

But do you know what happens after this? And what your legal obligation is after you register? Well, most vendors don’t know. As a result, they end up with SARS penalties, or worse, they land in jail.

Don’t suffer the same fate.

Read on to find out what your legal obligations are after you register for Vat so you can comply.

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After you register for Vat, you have this legal duty

You must submit Vat returns once you register for Vat.
After you register, SARS sends you a VAT103 registration certificate. And it gives you a ten digit Vat number.
The taxman also tells you about your tax period or Vat category (your timeframe for submitting your returns). This is very important and you must never get it wrong.
You see, not every vendor pays Vat at the same time. You make your Vat payments according to your tax period.
SARS bases the tax period you submit your Vat return in on your business’ turnover in any 12-month period.  For example, vendors whose turnover is less than R30 million in a 12-month period fall under category A. Their Vat returns are due in January, March, May, July, September and November
Lastly, after you register, SARS tells you if you’re on the invoice or payments basis. These are the two methods to account for Vat.
In this article, we explain that:
  • If you’re on the payments basis, it means that you must account for output tax (the Vat you charge to your customers) as you receive payment. And you only claim your input tax after making payment to your when suppliers.
  • If you’re on the invoice basis it means, you must account for Vat either:
  1. At the time you issue an invoice; or
  2. At the time you receive payment for the supply, whichever occurs earlier.
There you have it: After you register for Vat, you have a legal obligation to submit your Vat returns on time and account for Vat correctly. Make sure you comply to avoid SARS penalties or jail time.
PS: Check out the Practical Vat Loose Leaf Service for more information on Vat registration.

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