What is new?
- 1 December 2023 – Issue 17 (December 2023) of the VAT Connect newsletter is available.
- 7 August 2023 – Issue 16 (August 2023) of the VAT Connect newsletter is now available.
- 30 March 2023 – The VAT264 form has been modernised to make it easier and simpler for vendors to complete. It has also been updated to align with the recent VAT amendment contained in the Taxation Laws Amendment Act, 2022. See the new formVAT264 declaration for the supply of second hand goods external formhere.
- 1 July 2022 – VAT Domestic Reverse Charge (DRC) on valuable metal from 1 July 2022
A VAT Domestic Reverse Charge (DRC) on valuable metal was introduced in the Regulation published inGovernment Gazette46512 on 8 June 2022, see Regulations on Domestic Reverse Charge relating to valuable metal, issued in terms of section 74(2) of the Value-Added Tax Act, 1991 (Act 89 of 1991),Notice 2140.The DRC Regulations came into effect on1 July 2022.For a comprehensive understanding of these Regulations, see theExplanatory MemorandumandMedia Statement. For more information see theVAT Domestic Reverse Charge webpage.
What is VAT?
VAT is an abbreviation for the term Value-Added Tax. It is an indirect tax on the consumption of goods and services in the economy. Revenue is raised for government by requiring certain traders (vendors), that carry on an enterprise to register for VAT.
Subject to certain conditions, the vendor must then charge VAT on supplies of goods and services made by it (output tax). VAT is only charged on taxable supplies made. Taxable supplies are supplies for which VAT is charged at either the standard rate (currently 15%) or zero rate (0%). There is a limited range of goods and services which are subject to VAT at the zero rate or exempt from VAT.
The vendor will also be entitled to deduct VAT charged to it (input tax) when incurred for making taxable supplies. Under limited circ*mstances a vendor may claim a deduction (notional input tax) on a supply made to it by a business that is not registered for VAT.
VAT is non-cumulative, meaning that a credit/deduction is allowed for VAT paid in previous stages, within the production and distribution chain. The vendor is required to pay the difference between the output tax and the input tax or claim a VAT refund where the input tax exceeds the output tax.
VAT is therefore, charged at each stage of the production and distribution process and it is proportional to the price charged for the goods and services. VAT is also payable on the importation of goods and on imported services.
