VAT registration places certain obligations and record keeping duties on a vendor.

For example a vendor must ensure that:

• VAT is collected on taxable supplies;
• VAT is included in all prices advertised or quoted;
• tax invoices are issued for supplies made, where required;
• returns are submitted and payments are made on time; and
• documentation is obtained and retained to evidence the liability for VAT.

Record Keeping

Retention of tax invoices for supplies made, bills of entry for goods imported or exported and the general maintenance of proper accounting records and documents are all very important compliance aspects of how the whole VAT system operates. These documents form an audit trail which SARS uses to verify that a vendor has complied with the law. A vendor is required to retain these records for a period of 5 years.

Calculation of VAT

Determine the VAT charged (output tax) and calculate the amount of input tax the vendor is entitled to deduct. Pay the difference between the output tax and input tax or claim a refund where the input tax exceeds the output tax.

VAT 201 Return

A vendor must complete a VAT 201 return (declaration) for every tax period and submit it to SARS on or before the due date.  The return reflects VAT charged on supplies (output tax) and amounts a vendor is entitled to deduct as input tax. The difference between output tax and input tax could result in either a payment to SARS or a refund to the vendor.

For more information on how to complete the VAT 201 declaration, see the Guide for completing the VAT201 Declaration.

When to submit VAT returns and make payments

A vendor must submit VAT returns and make payment (or claim a refund) of  VAT on or before the 25^th day or the last business day of the month (if registered for eFiling) following the month in which the vendor’s tax period ends. Where the 25^th day is not a business day, the day for submitting a return and making payment will be the business day preceding such day. Late payments of VAT will attract penalty and interest.

How should VAT be paid?

VAT can only be paid by one of the following payment methods:

• SARS eFiling system; 
• Electronic Funds Transfer (EFT);
• At any of the following selected banks:
  • Amalgamated Banks of South Africa (ABSA);
  • Capitec;
  • First National Bank (FNB);
  • Nedbank; or
  • Standard Bank.

For more information, see SARS’ Payment Rules.