Quote Originally Posted by Sieg View Post
Those of us who have been bothered with VAT in a business know that hassle: vat returns every two months, cash flow to pay in time, being the Receiver's little tax collector, invoices not paid but still having to account for VAT and so on. One wonders if the VAT paid on expenses that one can deduct, is worth all the headache. Then I also thought: If I do not have to charge VAT on my product or services, then I will be cheaper than my competitor.

So, is it going to be worth my while to start a new "enterprise", fresh and clean, as of next week Monday?
Surely it all depends on the percentage of your business that is VAT registered. Any VAT registered customer continues to pay the same amount, while a non-registered customer would effectively get a cheaper rate.

In terms of the VAT on invoices versus payments (accrual versus cash basis). My wife is VAT registered in her personal capacity, but is registered on a cash basis. If the registered entity is a natural person with taxable sales under R2.5mil then you can register on a cash basis and only pay when the money actually hits your bank account (and likewise, only deduct when it leaves your bank account).

We're definitely going to deregister her, as there is one client who will only pay a certain fixed amount which resulted in a loss of profit for all of those cases. The benefit of claiming expenses is less than the loss of profit. All the other clients VAT is just added on to the actual cost.