VAT,profit calculation

[dellatjie]

It doesn't make sense though that customers would want you to register for VAT just to be able to claim that amount back from SARS?

Why just NOT pay it in the first place?

[IMHO]

dellatjie, it is to keep their bookkeeping systems uncomplicated. They ensure all their suppliers is vat registered, then they claim vat on all purchases and do not have to worry who is registered and who not and whether they can get the same price from a vendor that is registered. It is like working with apples and not to worry whether one is a pear. If they get audited later by SARS, they have no risk of some claims being rejected, which could cost them a lot of money.

[CLIVE-TRIANGLE]

If you are not registered for VAT, then it means your input vat becomes a cost to you and it's recovery is included in your price to your customer, thus making you more expensive than Joe who is registered.

[dellatjie]

@IMHO, thanks for the explanation, I think because accountants / auditors are not that involved in the day-to-day activities of a business, they tend to miss these obvious practical workings of businesses.

@Clive-Triangle - Makes more sense now, thank you for helping me think further!