Belasting op Toegevoegde Waarde (BTW) – Registrasies, Nulkoersvoorraad en Vrygestelde Lewerings
October 1, 2018

Value-Added Tax (VAT) – Registrations, Zero-Rated Supplies and Exempt Supplies

When do I have to register for value-added tax (VAT) and when am I allowed to register? What are the different types of VAT supplies? What do I need to submit to South African Revenue Service? These are all common questions when we deal with VAT especially with first-time VAT vendors.  

What is VAT? 

VAT is an indirect tax, which is imposed on the sale or purchase of goods and services whenever a transaction is concluded between two parties. It is generally designed to tax the final consumer of goods and services with a VAT vendor acting as an agent for SARS.  

VAT is levied on the supply of most goods and services including imported goods and services. VAT on imported goods is collected by  customs. There is a limited range of goods and services which are subject to VAT at the zero rate or are exempt from VAT.  

Exempt supplies: 

Exempt supplies are goods or services on which VAT is not imposed and thus excluded from the VAT regime and includes the following:  

  • Transport of fare-paying passengers and luggage  
  • Residential accommodation  
  • Financial services  
  • Supplies by any ‘association not for gain’ of any donated goods or goods manufactured by PBOs if, at least, 80% of the value of materials used in making of such goods consists of donated goods  
  • Educational services if registered with the Schools Act/higher education  
  • Membership fees to employee organisations/trade union  
  • Childcare services in a crèche/after-school care centre 

The input VAT on goods and services acquired in delivering exempt supplies will not be claimable. 

Zerorated supplies: 

A zero-rated supply is a taxable supply on which VAT is levied at the rate of 0%. Therefore, no output tax will be payable to SARS in respect of zero-rated supplies. Zero-rated supplies include: 

  • Certain basic foodstuffs 
  • Fuel levy goods 
  • Going concern 
  • International transport of goods or passengers 
  • Municipal property rates 
  • Farming goods produced or consumed in the course of conducting a farming enterprise 

Vendors making zero-rated supplies are entitled to claim their input tax deductions on goods or services acquired while making such taxable supplies. 

Who should 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 R1 million in any consecutive 12-month period.  

A person/business can apply for voluntary registration even though the total value of taxable supplies is less than R1 million. A person may apply for voluntary registration if that person:  

  • Is a “municipality” or is carrying on the activities of a “welfare organisation”, a “share block company” or “Foreign donor funded projects”  
  • Is carrying on an enterprise and the value of taxable supplies exceeded the minimum threshold of R50 000 in the past 12-month period  
  • Supplies commercial accommodation, provided the minimum threshold of R120 000 per annum is met  
  • Carries on an enterprise and the value of taxable supplies has not exceeded the R50 000 minimum threshold but can reasonably be expected to exceed that threshold within 12 months from the date of registration 

If you need any assistance with your VAT registration, processing or submissions, please contact your relationship director or Adrian de Geus at adrian@asl.co.za for guidance.