Currently section 23 of the Value-Added Tax Act No. 89 of 1991 (the "VAT Act") provides that a person becomes liable to register for value-added tax ("VAT") at the end of the month where the total value of taxable supplies made by that person in the period of 12 months ending at the end of that month in the course of carrying on all enterprises has exceeded R1 million. Such a person must compulsorily apply to be registered as a VAT vendor within 21 days.

Until that person is registered as a VAT vendor by SARS, that person cannot charge VAT on any supplies made it in the course of carrying on its enterprise. Unfortunately, it has taken some vendors months to be registered as a VAT vendor and there are no provisions in the VAT to address this transition from a non-vendor to a VAT vendor (i.e. the person may not levy VAT on any of its supplies during this period). Accordingly, it has been proposed in the Budget Speech that the liability date for registration as a VAT vendor will be clarified.

Written by Andrew Lewis, Senior Associate, Tax, Cliffe Dekker Hofmeyr