• South Africa News

If you have already registered your business with SARS’ e-filing system, you can omit the second part of the process, and send through your documentation from your laptop. If this is the case, then you need to complete the VAT e-filing form, VAT201. Sage’s cloud-based accounting software can make this process easier.

Tax season is upon us, one of those niggling deadlines which seems to rear its head almost as soon as you cleared it off last year’s calendar. Taxation in South Africa is generally seen as fairly sophisticated, and follows world best practice in several regards. This includes the ability to file and query tax returns using a fairly advanced online system, and have a lot of your questions answered telephonically by staff at the South African Revenue Service. However, when tax season is underway – as it has been since the beginning of July – call volumes are high and online traffic can slow down the speed of the SARS website. It’s useful to know about certain deadlines regarding business taxation in South Africa so that you’re aware of what the revenue service will require of you and your company in the upcoming months. 1 September 2014 – 31 October 2014: In a few day’s time, Employer Interim Reconciliation will begin.

During these two months, employers will be required to submit their Employer Reconciliation documentation for the ‘interim’ transaction period – the six month period between 1 March and 31 August. (Reporting on last year’s full tax year for employers closed on 30 May 2014). Employer reconciliation is a requirement by SARS for taxation in South Africa by those companies deemed as employers. In order to successfully complete this recon, your company needs three things:.

Copies of your monthly Employer Declaration forms (known as EMP201s) for the period that is being reported on. These submissions should have been made monthly to SARS, usually by the HR department if your company has one. EMP201 forms give the revenue service an idea of how much money your company paid in salaries and wages for that month. Be aware of nuances around reporting on these forms – for example, casual and contract staff should be reported on separately from permanent staff salaries. Payments submitted: A record of corresponding payments for the reporting period must be provided as part of requirements of. Employee tax certificates (IRP5s) must also be generated by your company for each employee.

Nowadays, these can be loaded immediately onto the employee’s eFiling account rather than manually generated and submitted. Once your company has inputted this documentation, SARS will review your reconciliation. If it fails to balance across all three elements, it will issue you a letter saying your reconciliation submission was unsuccessful. You will then have an opportunity to correct and re-balance the recon if necessary. 26 September 2014: This is the final day for individuals making manual submissions to submit their tax returns. Therefore, taxation in South Africa requires your company to have prepared manual IRP5s well in advance of this date for all employees who will not be able to file their returns online.

21 November 2014: This is the overall deadline for individuals filing tax returns. Ensure that IRP5s for all employees are loaded onto the eFiling system well in advance of this date. Monthly – VAT forms: By the 25 th of each month, your company is required to submit its VAT201 form for the period (if you are using eFiling, this deadline is extended to the 30 th of the month). Any business that has taxable supplies of more than R1-million in any consecutive 12 month period is required to register and report on their value-added tax. Monthly – EMP 201 forms: As already mentioned, taxation in South Africa requires that employers submit these forms monthly. They are usually required near the beginning of the month (between the 5 th and the 7 th) so aim to have them done straight after your payroll run has been completed. These are the deadlines facing your company between now and the end of the year.

Ensuring that your submissions are accurate is another matter entirely — one that requires a trained professional. Taxation in South Africa also allows qualifying businesses to register for different tax methods such as turnover tax (a slightly simplified tax system for smaller businesses) or taxation for SBC’s (Small Business Corporations).

You’re also required to register for other such as PAYE (pay as you earn), UIF (Unemployment Insurance Fund) and SDL (Skills Development Levies). Instead of trying to understand the complexities of all tax requirements for your business and simultaneously wearing all the other hats required of a business owner, you might consider outsourcing your tax requirements to a. The Finance Team has a team of experienced financial professionals who can provide you with part-time or ad hoc assistance in a way that suits your company’s needs and budget.

What is VAT VAT is an acronym for Value Added Tax. In South Africa, VAT is currently 14% of the value of goods and services. VAT is an indirect tax; this means that the government gets money from the manufacture or sale of goods and services, rather from direct payments from the tax payer to the government. Consumers of these goods and services pay an additional amount on top of the final sale price in order to be compliant with the tax laws of the country in which they live. In South Africa, most goods and services are levied with a flat 14% VAT rate; there are, however, a select range of goods and services that have exemption from VAT (see this article for more). VAT is an incredibly important mechanism for creating government revenue. VAT is a relatively recent addition to South Africa’s tax system, introduced in 1991 at a rate of 10%.

In 2014, VAT accounted for 30.5% of all government tax revenue, on average, in the (a group of the most developed nations). In the same group of countries, the share of VAT in gross domestic product increased from 3.2% in 1965 to its present share of 7%.

In South Africa, after personal income tax. R281.1 billion was collected in 2015/2016, which was a 7.6% increase from the previous year, and amounted to 26.3% of total tax revenues. VAT is applied at each stage of production and distribution. So, the miner supplying metal to a nail manufacturer at R1 per 10g of steel, say, must charge an additional R0.14 for each R1. The nail manufacturer, selling the nails to a distributor at R10 per package must add R1.40 per package. The distributor, selling the nails to consumers at R20 per pack must add R2.80 to the final sale price. Each company at each stage of the process will be a VAT vendor, and able to reclaim their VAT expenditure – the consumer absorbs the VAT burden.

In South Africa VAT must be included in the final sales price of the good or service, as advertised to the consumer. This is unlike the United States of America for instance, where taxes on final goods and services are not included in the price of these items as advertised to the consumer. Those who supply goods and services to consumers have to register with the taxman in order to be compliant with VAT legislation. Currently, any South African supplier that makes or sells goods or services with a value of R1 million or more, in a 12 month period, is obligated to register as a vat vendor (see the next article in the series for more on VAT vendors, and how to registerlink).

There are currently 425,225 active VAT vendors in South Africa. What is a VAT vendor, and which items are exempt from VAT In part one of this VAT series, we looked at what VAT is. In this article, we’ll be examining what a VAT vendor is, and which items are excluded from VAT. A VAT vendor is a person, business, trust, or other entity that is registered with the government’s revenue service, and is obligated to pay VAT on purchases, and levy VAT on sales of goods or services. You are obliged to become a VAT vendor in South Africa if total sales in a calendar year exceed R1 million. Similarly, if your turnover exceeds R50,000, then you can voluntarily apply for VAT vendor status. In order to become a VAT vendor in South Africa, you must complete the registration process using a VAT101 form (we cover the registration procedure here), or, if you’re registered with SARS e-filing When importing goods, VAT is also levied, except in certain situations.

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VAT is calculated separately from tariffs and import levies – remember that VAT is ultimately a tax that is taken on by the final consumer of the good or service, and that VAT vendors can claim back their VAT expenses from the revenue service. There are, however, goods and services that are designated by the government as exempt from VAT. These will now be discussed.

Which items are excluded from VAT? VAT is an indirect tax levied against the sale of good and services. This tax covers most items on the market. There are, however, a select group of goods and services that are exempt from VAT. Exported goods are exempt from VAT. This is because these goods will be subject to VAT or sales tax in the country of destination since the final consumers of the exports will not be in South Africa, and will face tariffs and import duties in those countries too. There are 19 basic food items that are exempt – this is to ease the financial burdens of the poorest consumers, and ensure that there is little chance of people going hungry due to limited budgets.

These goods are: brown bread, maize meal, samp, mielie rice, dried mielies, dried beans, lentils, tinned pilchards and sardines, milk powder, dairy powder blend, rice, vegetables, fruit, vegetable oil, milk, cultured milk, brown wheaten meal, eggs, and edible legumes and pulses of leguminous plants. Farming inputs are also zero-rated for VAT, as is paraffin for lighting, goods subject to the fuel levy, international transport services, and the sale of going concerns. VAT exemption is also granted to educational services, residential rental accommodation, public transport, and non-fee related financial services. Further, if your business is located in an industrial development zone, you can get VAT exemption on a number of imported goods and services. How Sage can make your VAT returns easy Sage’s integrated is the ideal platform from which you can arrange your financial affairs, and its capabilities in aiding your tax are exceptional. Sage’s benefits for filing VAT returns are multi-faceted.

Sage’s invoicing capabilities provide the essential foundation for a hassle-free tax season. With Sage, you can move to a paperless invoicing system. The benefits of such a system extend beyond environmental awareness – with electronic invoicing, your receipts are automatically organised, and the information from your invoices is fed into your broader financial profile automatically.

VAT invoices Remember, that for any sale over R50, a tax invoice must be issued. These invoices are crucial.

They are the evidence that establishes, for a VAT vendor, how much in VAT payments they are eligible to claim back from the tax authorities. Sage for mobile allows you to issue and service invoices from your smart phone, with the information feeding back into your main Sage account. This means that you can secure business immediately, with no hesitation.

So, Sage’s services provide the foundation of a tax season that involves minimised effort, and one that puts your business in accord with financial best practices. A well-structured financial profile has benefits beyond saving time on tax – you’re far more likely to receive rebates from the revenue service if your books are in impeccable order than if they are in a state of chaos, and application for business support (subsidies or credit applications) are more likely to be approved when the vendor of the support is assured by the quality of your financial records. Get the right information With the foundation in place, you can use Sage to go about the business of doing your tax. Sage allows for easy transfer of information between your Sage for small business software, and your accountant’s edition of Sage. Not only will your accountant appreciate that they will need to spend less time and effort having to reconcile your books, but you’ll also pay less, as the hours they’ll need to spend working on your books will be significantly reduced, if you’ve been following best practice. Sage’s tax functionality allows you to process and pay your tax from within the software. Using the Reports function, select the VAT option.

This will take you to the VAT return and reports option. From here you can select the VAT 201 calculation report. All you need to do is ensure that the time period for the VAT report is correct, that all the relevant transactions for the VAT period have been processed, and that all the transactions are assigned to the correct VAT type. While this report cannot directly be submitted to SARS, it will consist of the most important data, and can be the foundation of your VAT report.The amount of VAT charged, or a statement to the effect that VAT at the rate of 14% is included in the total cost of the goods. A guide to VAT registration Registering for VAT in South Africa has become a lot easier in recent years, thanks to the introduction of electronic filing. Before this became possible, you’d need to go to the revenue service’s offices, trusting that you had brought along with you all the information and documentation needed to complete the process.

Even if you’d managed to collect everything you could possibly need, you’d still have to negotiate the crowds of people doing the same, and the sparsely distributed disinterested bureaucrats manning the desks. While internet registration and filing has significantly improved this once arduous process, there are still some things that you ought to keep in mind in order to avoid frustration. To begin with: know whether or not you are legally obliged to register to be a VAT vendor. The current South African legislation requires any entity with a turnover of more than R1 million over the course of 12 months to register as a VAT vendor. If turnover exceeds R50,000, then you may voluntarily register for VAT vendor status – this is a useful thing to do, even if your business is in its infancy, as you can claim back VAT, and, other businesses see VAT vendor status as a signal of professionalism. If you’re about to reach 21 days of exceeding the R1 million limit on your year’s turnover, you have to get the VAT vendor application for completed and returned to SARS for processing.

VAT101 If you’re not registered for e-filing, then you’ll need to download, print out and fill out. On this for you need to list:. Nature of entity – is it a company, individual or trust applying?. Your personal and company details. Trading name of the applicant. Company/Closed Corporation/Trust registration number.

Financial year details. Industry classification. The details of your representative taxpayer. The details of your entity’s members/trustees/beneficiaries/partners or directors. Banking details Once you’ve completed the VAT101 form, you have to take this in to your nearest SARS branch, along with the required supporting documentation. This will include copies of identity documents for all relevant parties, proof of company registration, proofs of address, financial statements, and banking details.

VAT201 If you have already registered your business with, you can omit the second part of the process, and send through your documentation from your laptop. If this is the case, then you need to complete the VAT e-filing form, VAT201. Sage’s can make this process easier. Here are the steps that you need to go through:.

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Login to SARS e-filing. On the left-hand side bar, select “Organisations”, and select the “Organisation Tax Types” option. Once the screen is loaded, choose the VAT201 option.

Fill in your VAT reference number, and choose the relevant local tax office. Click to continue – your application will take some time to be verified.

Once your account has been validated and activated, you can proceed to complete the VAT201 online form, in accordance with the VAT101 form. Since you’re already registered for e-filing, much of the information will be pre-populated. Complete financial information regarding your VAT liability to the revenue service. The system does auto-calculate, but make sure that you have distinguished any items that are zero-rated for VAT. If you have registered for a diesel allowance, make certain to log the relevant figures here too. Once you’ve inputted all the relevant considerations, complete the payment details section, and, if applicable, request a VAT refund. Submit the form, and once complete, you’ll be given the option of completing a VAT payment.

If you choose to do this, you can pay your VAT obligations, and receive a confirmation page that you can save and print out. For more detailed instructions on the VAT process, you can turn to.