Mandatory registration must be done within 21days of exceeding R1million. Voluntary registration has been made easier with some additional rules.
Sales less than R1million, but more than R50,000 for the past 12months.
- Trade has been longer than 2months, but not more than 11months, then the average of R4,200 of trade, for the preceding months. Example: if total earnings, for 5months were R25,000, then in month 6, you can register for VAT.
- Trade for one month exceeds R4,200, voluntary registration can be done.
If no revenue has been generated, then there are 3 options available:
1. Contract stating that more than R50,000 will be made in the next 12months.
- As per a SARS branch manager, there must be full detail on the contract : Supply volumes, details of supplies/services to be rendered as well as the agreed upon price.
- Signatures of both parties and preferably on the taxpayer’s customer’s letterhead.
2. Financial agreement with a bank, credit provider, non-resident or any other authority, where repayments in the following 12months will exceed R50,000.
3. Where expenditure – expense or capital in nature – will, or has, exceeded R50,000. As per a SARS branch manager : For capital goods, an on-site inspection will have to be done.
Even though registrations can be done via e-filing, the following documents will be required (however this will most probably vary based on the branch you visit as well as the type of registration):
- Power of attorney (for tax practitioners).
- Resolution passed where the company representative – as per the power of attorney – has indeed been appointed as the representative. YES, even it is one director.
- Company registration docs – Official Company Disclosure from CIPC will suffice (latest).
- Certified ID’s for all directors ( no older than 3months).
- Proof of address for directors and entity.
- Branches and call centre vary on this:
– Letter from the bank confirming details and/or
– 3 months bank statements.
- Proof for the type of registration:
– Invoices to customers (and the bank statements to correspond).
– Written contracts.
– Finance agreement and proof of purchases.
An issue that occurs quite frequently is where a newly founded company – most of the time for the purpose of – wants to apply for a tender, but requires a VAT number in order to do so. This becomes quite complicated as none of the rules can be applied to a “maybe” or a possible income stream. This is an area where, we believe, tax authorities need to have a look on special conditions and/or terms.
– Salim Khan