VAT Registration (South Africa)

Due to the high level of VAT fraud, SARS has made the VAT registration process increasingly strict, often resulting in delays, especially for start-up businesses. For this reason, many businesses prefer to appoint professionals such as GFI to manage the process on their behalf. Because this service requires significant professional time and compliance review, the pricing reflects the level of work involved.

Who Must Register for VAT?

Compulsory VAT Registration

VAT registration is mandatory where a business:

• has earned more than R1 million over any continuous 12-month period, or
• is expected to exceed R1 million in taxable turnover during the next 12 months.

Voluntary VAT Registration

A business may apply for voluntary VAT registration where:

• The income for the past 12 months has averaged at least R4,200 per month
• taxable turnover has exceeded R50,000 in the preceding 12 months, or
• In the case of a commercial rental business only, turnover exceeds R60,000.

Voluntary registration allows the business to claim input VAT. However, it also creates an ongoing administrative obligation to prepare and submit VAT returns, usually every two months.

Requirements for VAT Registration

Please note that the list below may not be exhaustive, as SARS requirements may change from time to time. GFI has not successfully registered a company for VAT without receiving all of the information and documents listed below. Engagement cannot be accepted unless these are provided, and even where all documents are submitted, registration cannot be guaranteed.

To start the VAT registration process, please provide the following:

Company Registration Documents

• A copy of the certificate of incorporation relevant to the entity being registered
• Registration Certificate (CoR 14.3) or Notice of Incorporation
• Founding documents for entities not registered with CIPC
• For trusts, a Letter of Authority or Trust Deed issued by the Master of the High Court.

Identity Documents

• Copies of the IDs or passports of the two primary members, directors, or trustees
• A copy of the registered representative’s ID, temporary ID, driver’s license, or passport
• For smart ID cards, both sides must be provided.

Bank Confirmation

• An original canceled cheque, or
• An original bank letter confirming the existence of the entity’s bank account, or
• A bank statement or bank letter not older than 3 months, where required.

Proof of Turnover for Voluntary Registration

Where registration is voluntary, proof must be provided that taxable supplies exceeded R50,000 in the preceding 12 months. Acceptable proof includes:

• The last 3 months’ bank statements showing turnover over R50,000, together with matching invoices, or
• signed contracts or purchase orders from customers totaling at least R50,000.

Proof of Business Address

Proof of the business address must not be older than 3 months. Acceptable documents include:

• a recent municipal utility bill in the name of the business
• a recent municipal utility bill for the premises, together with an affidavit from the owner confirming that the business operates from that address
• a copy of the lease agreement between the business and the lessor.

Proof of Residential Address of the Representative Vendor

Proof of residential address must not be older than 3 months. Acceptable documents include:

• a recent municipal utility bill in the name of the representative vendor
• a recent municipal utility bill for the residence, together with an affidavit from the owner confirming residence
• a copy of the lease agreement between the representative vendor and the lessor
• If the business and residential addresses are the same, an affidavit must be provided.

Additional Business Information Required

Please also provide:

• anticipated standard-rated supplies for the next 12 months
• anticipated zero-rated supplies, if any, for the next 12 months
• anticipated exempt supplies, if any, for the next 12 months
• the nature of the business
• the trading name, if different from the registered name
• a letter of authority authorizing GFI to act on behalf of the business for VAT registration
• the income tax numbers of the two prominent members or directors
• the cell phone number and email address of the representative vendor
• confirmation that the tax affairs of both the representative vendor and the business are up to date
• the date on which the person became liable for VAT registration
• confirmation that the SARS Registered Representative details have been updated, where applicable.

Important Note on the VAT Liability Date

The date on which the person became liable for registration is critical in the VAT registration process.

Follow This Procedure

• Select the first day of the month in which the first VAT invoice was issued to customers, or the date of incorporation if no non-VAT invoices have yet been issued.
• Move to the first day of the month in which it can be proven that turnover exceeded R50,000.
• If this date falls after the first VAT invoice was issued, go back to the first day of the month in which the first VAT invoice was issued.
• That date then becomes the date first liable.
• From this date, input VAT may be claimed, and output VAT becomes payable on all invoices issued thereafter.

How the VAT Liability Date Works

Voluntary VAT Registration

For voluntary registration, the VAT liability date is generally set according to the date of application. Backdating is not normally permitted unless sufficient supporting documents are submitted to SARS to justify the request.

Compulsory VAT Registration

For compulsory registration, the SARS eFiling system allows backdating for up to 6 months from the date the R1 million threshold was exceeded. If backdating beyond 6 months is required, an appointment at a SARS branch may be necessary, along with full supporting documents such as financial statements, signed contracts, or invoices.

Final Important Rule

The VAT liability date:

• must not be earlier than 01 September 1991
• must not be more than 3 months in the future.

Submission Instructions

All VAT registration requirements and supporting documents must be emailed to:

[email protected]