Why VAT Compliance is Critical
Value-Added Tax (VAT) is one of the most common, and most scrutinised, taxes for South African businesses. Incorrect VAT calculations or late submissions can trigger penalties, audits, and reputational damage. With SARS increasing its use of data analytics, the margin for error is shrinking.
Ensuring VAT compliance is not just about ticking boxes; it’s about integrating sound processes that safeguard your business from unnecessary costs.
Who Needs to Register for VAT?
You must register for VAT if:
- Your taxable turnover exceeds R1 million in any 12-month period (compulsory)
- You choose voluntary registration above R50,000 annual turnover
Tip: Voluntary registration can benefit start-ups wanting to reclaim input VAT on large initial expenses.
Understanding Input and Output VAT
- Output VAT: Tax you add to the price of goods/services you sell.
- Input VAT: Tax you pay on goods/services purchased for your business.
Your VAT payable = Output VAT – Input VAT. Negative results may qualify for a refund.
Common VAT Compliance Risks
- Claiming input VAT without proper tax invoices
- Missing filing deadlines
- Not accounting for VAT on imported services
- Incorrectly categorising zero-rated vs. exempt supplies
CTV’s VAT Review Service audits your processes to ensure accuracy before SARS does.
Best Practices for Ongoing Compliance
- Maintain Proper Records: Keep invoices, receipts, and import/export documentation for at least 5 years.
- Use Accounting Software: Automates calculations and reduces human error.
- Set Reminders: SARS VAT201 returns are due every two months, don’t miss them.
- Verify Supplier VAT Numbers: Ensures you can legally claim input VAT.
How to Handle VAT Audits
If SARS selects your business for a VAT audit:
- Respond promptly to all requests
- Provide organised, complete documentation
- Consider professional representation to manage communication
Benefits of Professional VAT Support
- Accuracy: Correct application of VAT rules to your industry.
- Efficiency: Streamlined returns process saves time.
- Risk Reduction: Minimises audit triggers and penalties.
- Cash Flow Management: Timely refunds and accurate liability forecasts.
Why Partner with CTV for VAT Compliance
CTV’s tax professionals understand the intricacies of South African VAT legislation. We help with registration, return preparation, audit support, and ongoing compliance, allowing you to focus on running your business with confidence.
Avoid costly VAT mistakes, Contact CTV today to strengthen your compliance processes.
