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Thread: VAT Threshold - Foreign Clients

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    VAT Threshold - Foreign Clients

    Happy New Year to everyone!

    The annual VAT threshold is R1-million. 90% of my clients are foreign and the foreign turnover will likely exceed the threshold later this year.

    I plan to incorporate a business entity to benefit from Small Business Tax soon but I would like to make sure about the VAT thing.

    Thanks!

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    I believe you still have to register for VAT if your turnover exceeds R1 million per annum.

    On the VAT return look at item 2A

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    You need to declare your turnover on exports as a zero rated supply. The note on this line says:
    Zero rate (only exported goods)
    Zero-rated supplies of all goods exported from the Republic of South Africa (RSA). Please note the Customs code is a mandatory field.
    Last edited by Dave A; 06-Jan-11 at 07:13 AM.
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    You will be liable to register for VAT if the income earned from taxable supplies - selling goods or fees earned from services supplied is more than R1 million in any consecutive period of 12 months, or is reasonably expected to exceed that amount.
    You will not be required or allowed to register if only exempt supplies are made. Exempt supplies are not taxable supplies, and therefore no input tax be claimed on any expenses incurred to make exempt supplies.

    The term “taxable supplies” includes all supplies made by a vendor in the course of an enterprise on which VAT should be levied, and includes supplies which are subject to VAT at the zero-rate.

    VAT is a tax on local consumption. Where consumption is outside of the RSA, the zero rate applies. Where goods are temporarily admitted into the RSA for processing, repair, cleaning or reconditioning, the services supplied directly in connection with those goods are zero-rated.
    The direct export of goods may be zero-rated. The international transport of goods or passengers is zero-rated. The supply of services physically rendered or performed outside the RSA qualifies for the zero rate. Where services are supplied to a non-resident who is not in the RSA at the time the services are rendered, the supply will qualify for the zero rate.

    Hope this will help you Anakin.

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    anakin (06-Jan-11), Dave A (06-Jan-11)

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    Thanks so much for responses.

    The input tax is really minimal - probably around 10% of the total budget.

    It is quite interesting if I register for VAT then the local turnover will suddenly become VAT payable. My ultimate goal is to keep the bureaucracy as minimum as possible.

    You will not be required or allowed to register if only exempt supplies are made. Exempt supplies are not taxable supplies, and therefore no input tax be claimed on any expenses incurred to make exempt supplies.
    If I apply SARS for exempt supplies "clearance" then I don't have to register for VAT, am I correct?

    Thanks!

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