The VAT system comprises of three types of supplies:
- Standard-rates supplies – supplies of goods and services subject to the VAT rate in force at the time of supply (currently 14%);
- Exempt supplies – supplies of certain services not subject to VAT. Vendors making exempt supplies are not entitled to input VAT credits;
- Zero-rated supplies – supplies of certain goods or services subject to VAT at zero percent. Vendors making zero rated supplies are entitled to input VAT credits.
Key features
- Enterprises with a turnover of less than R1 000 000 in any period of 12 months are not obliged to register for VAT;
- Enterprises with a turnover of less than R50 000 in any period of 12 months are not permitted to register for VAT;
- VAT returns are generally submitted on a 2 monthly basis unless turnover in any period of 12 months exceeds R30 million, in which case returns are submitted monthly;
- Farmers may submit VAT returns on a 6 monthly basis as long as their turnover does not exceed R1.5 million and property letting companies and trusts may, subject to certain requirements, submit annual VAT returns;
- Vendors may reclaim the VAT element on expenditure incurred for the purpose of making taxable VAT supplies except on:
- entertainment, excluding qualifying subsistence;
- passenger vehicles (including hiring); and
- club subscriptions.
- Input tax credits may not be claimed on expenditure relating to exempt supplies;
- Input tax credits may only be claimed upon receipt of a valid tax invoice;
- In order to be a valid tax invoice the name, address and VAT registration number of the recipient and supplier must appear on tax invoices where the VAT inclusive total exceeds R5 000.