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Does a company have to levy output VAT on revenue earned before it was registered?

Thursday, 05 February 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: I have a query relating to company currently in the process of filing its first VAT return. The company was registered using the voluntary process during February 2014 and its first VAT reporting period was July-August 2013. We were assured by the SARS consultants that all inputs prior to VAT registration could be claimed as long as it was done within 5 years, even though the company was not a vendor at the time of supply. 

My question relates to output VAT for the same period. The company did not levy VAT on pre-VAT-registration revenue; does the company have to declare output VAT on these transactions? If so, please confirm the correct accounting and tax treatment of the revenue transactions. 

A: In our view the output VAT liability in section 7 of the VAT Act occurs as from the date of registration per section 23 of the VAT Act. In our view, unless agreed otherwise, the VAT amount remains recoverable from the recipient in terms of section 67 of the VAT Act as the VAT was imposed (due to retrospective registration) after the transaction was concluded. In our view the amended section 67 per the Taxation Laws Amendment Act 2014 (effective from 1 April 2015) would still apply as this is for when the VAT Act applied for the first time.

In respect of the input VAT, please note that though section 18(4) of the VAT Act allows for certain deemed input VAT on supplies made prior to registration, we are of the view that section 16(2)(a) of the VAT Act in respect of the section 20 of the same act, tax invoice requirements may still be problematic. In this regard it is our view that you may have to request a ruling in terms of section 20(7) of the VAT Act from SARS to confirm that you may claim the inputs in respect of the invoices which do not have your VAT number stated on it.  

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.



Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

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