Value Added Tax or VAT (Terminology) (Government Tax)

What is VAT ?

It is Government Tax charged by a vendor (eg. developer) who is registered for VAT, on the supply of goods and services, which is payable to the Receiver of Revenue at the standard rate of 14%.

There are two types of taxes in South Africa, namely direct and indirect taxes. Direct taxes consist of Personal Income Tax, Company Tax, and Capital Gains Tax. Indirect taxes consist of Value Added Tax (VAT) and Customs Duty.

Who has to register for VAT ?

Every natural person, trust, company, close corporation or partnership who produces goods or services and expects to generate an annual turnover of R1 000 000,00 or more, needs to register with the Receiver of Revenue as a VAT vendor.

How is VAT charged or claimed back ?

Customers buying products and services pay Output Tax and vendors buying materials and services from other vendors pay Output Tax.