VAT: some of the requirements – part 1

Content provided by a guest contributor.

“Who here loves the VAT man?” That is a question that I ask on a regular basis.  Sadly though, more often than not, mine is the only hand that goes up. It is definitely a mind set that needs to be changed if we are to make the best use of the concessions that SARS gives us.

That said, here are a few tips in terms of what must be done regarding the VAT requirements

1. Being a VAT vendor

Obviously – number one on the list is that you have to be a VAT vendor in order for any of this to apply to you and if your turnover is a million or more per annum, then being a VAT vendor is compulsory.  You can, however, apply to become a ‘voluntary’ VAT vendor.

2. VAT rates

VAT has to be charged at the current rate (as at April 2018) which is 15% and of course you have to make use of a valid ‘Tax Invoice’ and this has to be kept in terms of the correct retention period as promulgated by law. That means that your documents must be archived and retained.

3. Products and services

VAT must be charged for all services and/or products supplied by the vendor. These services and/or products must be wholly and/or partly used for consumption in the course of making supplies or supplying a service that is taxable. That means of course that if you buy a potato (as a basic foodstuff this does not attract VAT which means you cannot offset it), to make chips or mash or even a roast potato dish for your restaurant, you used the potato (but changed it in the cooking process) in your product and your product does now attract VAT.

4. Food and Entertainment

Going out for a meal with clients is called ‘entertainment’ and as such you can claim it as a business expense, but you cannot claim the VAT on it. However, there are some exceptions. If you or one of your staff are going out for a meal with a client and you (they) are out of town for longer than one night, you can claim the VAT back on this. In fact any meals taken by you and your staff, including alcohol, whilst you are out of town on business for a period longer than one night can have the VAT claimed for. Normally, you cannot claim VAT for ‘office refreshments’, however if you purchase refreshments for the delegates that you are training, then you can claim VAT on those refreshments.

As usual, it is about what you know and how you use it that will allow you to make the most of your relationship with SARS. In part two we will have a look at a few more expenses you can in fact claim VAT on.

The content in this article is provided by Nikki Viljoen, an Internal Auditor and Business Administration Specialist, and the owner of Viljoen Consulting.

About Viljoen Consulting:

Viljoen Consulting is a specialist Internal Audit company. It was established to provide access to Internal Audit functions, primarily targeting the SMME market, that were previously only enjoyed by large companies and corporations who could afford an Internal Audit Division. Viljoen Consulting recognizes the absolute necessity for SMMEs to implement best practices in respect of policies, procedures, flows, controls and other preventative practices, thereby protecting the company from possible fraud and other related losses.

Viljoen Consulting‘s services include bookkeeping, internal auditing, small business start-up, business sophistication assessments, and legal compliance.

For more information, contact:

Tel: 083 702 8849




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