What is VAT and how do you know when your business needs to register to pay VAT ?
VAT stands for Value Added Tax and is an indirect tax that the government charges on certain goods and services. By registering as a VAT vendor, you act as an agent for the government and assist in collecting and handing over the tax.
The VAT threshold is currently set at R1 million per annum so there isn’t a specific reason to register before your business reaches that. Some business owners choose to voluntarily register as it makes it easier for other businesses to consider them for contracts and tenders.
Input VAT is the VAT charged on money that you spend in your business, i.e. your expenses and supplier payments. Output VAT is the VAT you charge when invoicing clients and customers.
Is your business registered for VAT? Do your returns result in a payment or a return from SARS?