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| New VAT threshold |
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INFORMATION FOR VAT VENDORSNEW VOLUNTARY REGISTRATION THRESHOLDCurrently, the general rule is that a person may register voluntarilyfor VAT if the value of taxable supplies made by the enterprise hasexceeded the minimum threshold of R20 000 in the past 12 months.As from 1 March 2010, any person who applies to register voluntarilyfor VAT will be required to meet the new minimum threshold ofR50 000 (or R60 000 in the case of persons supplying “commercialaccommodation”). This excludes foreign donor funded projects andwelfare organisations which are not required to meet the voluntaryregistration threshold. Vendors that no longer qualify to be registered as a result of theincrease in the threshold have been identified through the VAT system. SARS is also currently preparing a communication which will be sent to the affected vendors advising them of the change in the law and notifying them that their VAT registrations will be suspended with effect from 1 March 2010. Deregistration will take place once all outstanding returns have been submitted, all outstanding taxes have been paid, anda final deregistration audit has been conducted. If you are registered for VAT and your taxable supplies have not exceeded R50 000 over the past 12-month period and you did not receive a letter regarding deregistration by the second week of February 2010, you should contact your local SARS office to establish whether you still qualify to be VAT registered. In the event that you do not qualify, application should be made to cancel the VAT registration by completing and submitting form VAT 123 to SARS. If you believe that you qualify for voluntary registration and have been sent the deregistration letter inerror, you should also approach the local SARS office with your written motivation (objection) as to why you should remain on register. Those vendors that are required to deregister must remember todeclare output tax (exit VAT) in terms of section 8(2) on the lesserof cost or open market value of any enterprise assets held on28 February 2010. This includes not only physical assets (e.g. stock, buildings and equipment), but also any rights which are capable of assignment, cession or surrender (e.g. licences and intellectual property rights). The value of the assets and the exit VAT must bedeclared respectively in Fields 1A and 4A of the final VAT 201 return together with any other VAT which may be due for the final tax period. Vendors that have to deregister solely as a result of the increase in the minimum threshold may apply to the local SARS office to make an arrangement to pay off the exit VAT in equal instalments over a period of six months without incurring any penalty or interest. These special payment arrangements do not apply to vendors that have already been identified for deregistration in the current exercise which is being conducted to clean up the VAT register. For more details in this regard, refer to the article “VAT DEREGISTRATION PROJECT” in VAT News 34 (August 2009) as well as the Media Release dated15 September 2009: Clean up of VAT register under way.More information regarding deregistratlon in general and the impact of the increase in the voluntary registration threshold can also be found on the SARS website. REMISSION OF INTERESTInterest is levied at the prescribed rate on any shortfall of VAT for a tax period which a vendor has failed to pay at the time that the VAT was due and payable. Currently, the Commissioner’s discretion for remitting any interest is based on whether it can be shown that either –• the vendor did not benefit financially as a result of the oncompliance· (taking interest into account); or• the State did not suffer any financial loss (including a loss of interest)taking into account both input tax and output tax.With effect from 1 April 2010 the Commissioner’s discretion to remit interest will be based solely on whether the interest was incurred as a result of circumstances beyond the vendor’s control. An example of the circumstances envisaged, is when a vendor’s payment instruction could not be carried out by the vendor’s bank because of a failure in the banking system. The new dispensation applies to any interest imposed in terms of section 39 on or after 1 April 2010. An interpretation note is currently being drafted to provide further guidance. Submitted by Marlize Pienaar |
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