This article covers the responsibility of businesses to register for Value Added Tax [VAT] in South Africa, and more specifically mandatory VAT registration, the process to follow, as well as the circumstance under which SARS will consider voluntarily registration for VAT even though the requirements for mandatory registration have not been met. The benefits and responsibilities that come with VAT registration is also discussed.

When to register your business for VAT [Mandatory VAT Registration]

VAT legislation only requires small businesses to register for VAT if the taxable supplies surpasses the threshold of R 1 million during any 12-month period. Once the threshold has been met, businesses are required to register for VAT within 21 days from the end of that month.

However, even if the R 1 million threshold has has not been met as yet, and there is a reasonable expectation that the taxable supplies will exceed the threshold in the next 12 months, VAT registration must be done immediately. This will often be the case where a written contractual obligation has been entered into which which will result in the taxable supply threshold to be exceeded in the next 12 month period.

It is therefore essential to monitor the value of taxable supplies regularly to ensure timely VAT registration ─ particularly if your taxable supplies are starting to get close to the prescribed threshold of R 1 million.

Voluntary Registration 

A person may also choose to register voluntary for VAT if the value of taxable supplies made or to be made is less than R1 million but has, under certain circumstances, exceeded R50 000 in the past period of 12 months.