VAT registration process in dire need of certainty
26 July 2012
Posted by: SAIT Technical
By Ruweida Collings
Value-Added tax ("VAT”) is an indirect consumption based tax on goods and services in South Africa. VAT is currently levied on taxable supplies made by a vendor at a standard rate of 14%.
The VAT registration process is initiated through the submission of the VAT101e form which is available on the South African Revenue Service’s ("SARS”) website. The VAT101e registration form clearly requests that certain supporting information/documentation accompany the registration form. In an attempt to reduce and deter fraudulent VAT registrations, SARS has recently implemented further stringent requirements to register for VAT.
It is a moot point that the VAT registration process requires more substantial insight into the activities intended to be carried out by those applying for same. However, it is difficult if not impossible to ascertain what supporting documentation is required as there is no consistency in this regard as SARS’ branch offices do not request the same supporting documentation.
In the past, applicants for VAT registration were able to track the progress of their application, as an administrator was assigned to the registration application. Now, call centres request the confirmation of certain information before they can discuss anything related to the ‘tax account’ in question, but are then unable to confirm if the registration application has been received or even where it is in the process.
Cognisance must be taken of the fact that the same rules cannot apply for every applicant, and as such not all applicants are in possession of the documentation requested for VAT registration purposes. For example, SARS requests the provision of three months bank statements which reflect a balance of at least R50,000, which is a problem for newly incorporated companies applying for registration based on agreements entered into as their bank account will not contain sufficient (if any) transactional detail.
An applicant’s failure to provide the requested supporting information results in unreasonable delays of the processing of the registration application, sometimes up to eight months. Perhaps the supporting documentary requirements need to be addressed and tailored according to industry/trading activity, expected taxable income or residency.
Due to the uncertainty and unreasonable requests from SARS regarding the registration process, it has become a hindrance to the local business community and impacts on foreign direct investment into South Africa. We should be encouraging investment into South Africa and not turning our back on interested investors.