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What are the advantages if a VAT vendor changes from the payments basis to the invoice basis?

16 February 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q:  A municipality intends to change its basis for submission of VAT returns from the payments basis to the invoice basis.They want to know how it is going to affect them going forward, as well as the advantages that will inform such a change.

A: The advantages or disadvantages of the invoice or payments basis will be fact specific and should be dealt with on that basis.

Where a vendor changes from the cash basis to the invoices basis section 15(4) of the VAT Act requires that the vendor submit to the SARS such information in the prescribed form calculating the tax payable or refundable. 

Such amount is calculated in terms of section 15(7) of the VAT Act for the change from payment to invoice basis. Where an amount is refundable, it will constitute a refund in terms of the TAA which means SARS are entitled to withhold the refund until it has audited or verified the relevant information.

Also not that if a vendor makes a changeover it will in terms of section 15(9) of the VAT Act it must prepare a list of debtors and creditors showing the amounts owing as at the end of the tax period before the approved changeover.

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.


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