TAX 3AB

• VAT was initially established at 10% on 30 Sept 1991
• Value-added tax (VAT) is an indirect tax
• VAT was increased to 14% on 7 April 1993
• VAT was increased again to 15% on 1 April 2018
• VAT has two components: Output tax charged on supplies made (or sold) by a vendor and Input tax paid on supplies acquired by a vendor
• VAT is levied on the supply of goods and services by a vendor in the furtherance of his enterprise at 15% or 0%
• Vendors submit VAT returns at the end of each tax period, accounting for all output tax (on goods supplied) and input tax (on goods acquired)
• VAT registration is required if taxable supplies are over R1,000,000 within the previous 12 months or if there are written commitments to make taxable supplies over R1,000,000 in the next 12 months
• Voluntary registration is possible if turnover in a 12-month period exceeds R50,000
• VAT vendors must charge VAT and pay it over to SARS, while purchasers can claim VAT paid from SARS if they are VAT vendors
• VAT is charged at different rates based on the type of supplies: standard-rated supplies, zero-rated supplies, and exempt supplies
• Standard-rated supplies are subject to 15% VAT, zero-rated supplies are subject to 0% VAT, and exempt supplies do not incur VAT
• Vendors must issue tax invoices with specific details including names, addresses, VAT registration numbers, and a description of goods supplied
• VAT payable on value of fringe benefits
• No output VAT if a fringe benefit is:

  • Tax-free (fringe benefit)
  • An exempt supply
  • A zero-rated supply
  • Supply of food, accommodation or entertainment
• Deemed output value = Fringe benefit value x 15/115
• Right of use of company car:

  • Motor car – 0.3% per month of determined value
  • Other vehicles – 0.6% per month of determined value
  • If employee has obligation to maintain vehicle, consideration for the deemed supply is reduced by the lesser of R85 per month or the deemed consideration
• VAT vendors must register on a payment basis initially and switch to an invoice basis once R50,000 turnover is reached
• VAT vendors must charge VAT on taxable supplies and can claim input tax incurred to make taxable supplies
• For standard-rated supplies, vendors must levy output tax at 15% and can claim input tax incurred to make taxable supplies
• For zero-rated supplies, vendors must levy output tax at 0% and can claim input tax incurred to make taxable supplies
• For exempt supplies, vendors do not levy output tax and cannot claim input tax incurred to make taxable supplies
• VAT vendors must calculate VAT payable to SARS by subtracting total input tax from total output tax
• VAT vendors must pay the difference if VAT payable to SARS is more than input tax, or they can claim it back if input tax is more than VAT payable
• Definitions:

  • "Value" or "market value" excludes VAT
  • "Cost" or "consideration" includes VAT
• Category A: Every two months

  • Months: January, March, May, July, September, November
• Category B: Every two months

  • Months: February, April, June, August, October, December
• Category C: EVERY month

  • Threshold: R30,000,000
• Category D: Every six months

  • Months: February, August
  • Includes: Microbusinesses, Farmers
• Category E: Once a year

  • Sole business letting of property
• Standard rated supplies:

  • All other supplies
• Zero-rated supplies include:

  • Exported goods
  • Sale of a going concern
  • Fuel levy goods
  • Basic foodstuffs
  • Gold coins issued by SARB
  • Illuminating kerosene
  • Goods on behalf of non-RSA non-vendor
  • International Transport and insurance of passengers/goods
  • Services rendered outside SA
  • Services to non-resident non-vendors
  • Supplies to independent branches outside SA
  • Repair/maintenance/clean foreign aircraft or ship
  • Intellectual property rights used outside SA
  • Municipal rates
• Exempt supplies include the following:

  
  

  
  

  Transport of passengers & personal effects by rail/road

  • Trade union subscriptions
  • Association not for gain
  • Supply of goods by a non-resident
  • Crèche/after-school
  • Sale/letting of land & improvements outside SA
  • Levies to body corp/HOA
  • Accommodation by employer to employee
  • Supply by political parties
  • Financial services