As your business grows, reaching the VAT registration threshold is an important milestone. Here’s what you need to know about registering, filing, and avoiding common pitfalls.
VAT Registration Threshold
In South Africa, VAT registration becomes compulsory when your business’s taxable turnover exceeds R2.3 million in a 12‑month period. Below this, you may choose to register voluntarily, but once you cross the threshold, registration is required.
The VAT201 Filing Cycle
Registered vendors must submit a VAT201 return every two months (bi‑monthly). This form declares the VAT you’ve charged customers (output VAT) and the VAT you’ve paid on business expenses (input VAT). SARS then calculates whether you owe VAT or are due a refund.
The Due Date
VAT201 returns are due by the 25th of the month following the end of your tax period. For example, if your tax period ends in September, your return must be filed by 25 October. Filing late can lead to penalties and interest charges.
Common Mistakes First‑Time VAT Vendors Make
- Missing the deadline: Waiting until the last minute often leads to errors or late submissions.
- Incorrect invoices: Not including a valid VAT number or charging VAT when not registered.
- Poor record‑keeping: Failing to track input VAT properly, which can reduce your refund or increase liability.
- Mixing personal and business expenses: Only VAT on legitimate business costs can be claimed.
- Assuming turnover is the same as profit: VAT is calculated on sales, not earnings.
