Value-Added tax ("VAT") is an indirect consumption
based tax on goods and services in South Africa. VAT is currently
levied on taxable supplies made by a vendor at a standard rate of
The VAT registration process is initiated through the submission
of the VAT101e form which is available on the South African Revenue
Service's ("SARS") website. The VAT101e registration
form clearly requests that certain supporting
information/documentation accompany the registration form. In an
attempt to reduce and deter fraudulent VAT registrations, SARS has
recently implemented further stringent requirements to register for
It is a moot point that the VAT registration process requires
more substantial insight into the activities intended to be carried
out by those applying for same. However, it is difficult if
not impossible to ascertain what supporting documentation is
required as there is no consistency in this regard as SARS'
branch offices do not request the same supporting
In the past, applicants for VAT registration were able to track
the progress of their application, as an administrator was assigned
to the registration application. Now, call centres request the
confirmation of certain information before they can discuss
anything related to the 'tax account' in question, but are
then unable to confirm if the registration application has been
received or even where it is in the process.
Cognisance must be taken of the fact that the same rules cannot
apply for every applicant, and as such not all applicants are in
possession of the documentation requested for VAT registration
purposes. For example, SARS requests the provision of three months
bank statements which reflect a balance of at least R50,000, which
is a problem for newly incorporated companies applying for
registration based on agreements entered into as their bank account
will not contain sufficient (if any) transactional detail.
An applicant's failure to provide the requested supporting
information results in unreasonable delays of the processing of the
registration application, sometimes up to eight months. Perhaps the
supporting documentary requirements need to be addressed and
tailored according to industry/trading activity, expected taxable
income or residency.
Due to the uncertainty and unreasonable requests from SARS
regarding the registration process, it has become a hindrance to
the local business community and impacts on foreign direct
investment into South Africa. We should be encouraging investment
into South Africa and not turning our back on interested
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