Summary VAT basics

VAT
Introduction to VAT:

• Consumption tax = indirect tax charged on goods / services consumed.
• Revenue for the government.
• Levied at 15%.
• Regulated by VAT Act No. 89 of 1991.
• Businesses (VAT vendors) act as collection agents for SARS.
• Charged at different levels of production.
• Individuals who purchase goods for own use may not claim input VAT.

VAT system - registration:

• Voluntary registration = taxable supplies (turnover) > R50 000
• Compulsory registration = taxable supplies > R1 000 000
• VAT vendors
o VAT registration number
o Include VAT on selling price
o Submit a VAT return


VAT system:

1. Registration.
2. Vat registration number issued.
3. Pay input VAT on goods/services purchased.
4. Include VAT on SP and CP.
5. Collect output VAT on sales made.
6. Complete & lodge VAT return.
7. Pay VAT over to SARS / claim VAT from SARS.

Input and output VAT:

• Goods/services are acquired from registered VAT vendor = claim INPUT VAT
• Registered VAT vendor sells goods/services = charged OUTPUT VAT
o Charged on taxable supplies
o Issue tax invoice to customer (includes VAT charged)


VAT calculation:

SELLING PRICE 100%
VAT 15%
TOTAL 115%