SARS may appoint a third party to satisfy a tax debt in terms of the Tax Administration Act and may therefore instruct your Bankers to pay your tax debts from any moneys which they hold on your behalf. The Taxpayer must be issued with a final demand for payment which must be delivered by SARS at least 10 business days before a notice is issued to the bank to transfer the debt. An application may be made to SARS within 5 days from receiving the final demand for a reduction of the amount to be paid based on serious financial hardship. However, SARS may also proceed with collection without notifying the Taxpayer if such notice will prejudice the collection of the tax debt. Other remedies/relief also exist when the tax debt is in dispute. The TAA requires a bank, if it reasonably suspects that the payment of a refund is related to a tax offence, to immediately report the suspicion to SARS and upon such notification SARS has the discretion to instruct the bank to hold the funds.

If a vendor is entitled to a refund, interest accrues if not paid by SARS within 21 business days of receiving a valid VAT return in respect of that refund. However, the period of 21 business days may be suspended by SARS in certain instances. There are other remedies to expedite a refund which is due. Kindly contact us for assistance if you experience a delay in obtaining a VAT refund from SARS.

The most frequent reason is that the return is selected for an audit or verification and the Taxpayer does not respond to the request for information issued by SARS. It often happens that the Taxpayer does not receive the notice and will therefore not be aware of the pending request for additional information. SARS may also require the Taxpayer to verify its banking details before a refund is paid or hold back the payment if there are outstanding tax returns or unpaid tax debts.

The objection must be raised using the form prescribed by SARS and submitted via e-filling or at a SARS branch within 30 business days of the assessment. The taxpayer must specify the grounds for the objection in detail. It is important to note that incomplete grounds or reasons for an objection may jeopardize the tax dispute process going forward.

It is mandatory for any business to register for VAT if the income earned in any consecutive twelve-month period exceeded or is likely to exceed R1 million. However, a business may choose to register voluntarily if the income earned, in the past twelve-month period, exceeded R50 000 or expenses exceeding R50 000 were incurred.

Where a foreign entity supplies goods or services (including e-services) to any South African person, subsidiary, holding company or client, it may potentially be liable to register for VAT in South Africa. Such foreign companies should obtain an opinion from a registered tax practitioner to assess whether a VAT registration is required.

VAT paid by a vendor to a VAT registered supplier on any goods or services which were acquired for use in its business may qualify as an input tax deduction, subject to certain exceptions. It is important that input tax may only be deducted insofar as the goods or services are used for the purposes of making taxable supplies. Subject to certain exceptions, no VAT may be deducted when goods or services are acquired for entertainment related, private, exempt, or other non-taxable purposes. Input tax (notional input tax) may also be claimed in some instances where goods are purchased from non-VAT registered suppliers.

VAT registration may take between 5 - 21 working days, depending on whether SARS requests verification of your company details and/or premises.

Subject to the requirements and provisions of the Act, a zero rated supply of a service normally occurs where a vendor supplies services to a person who is not a resident and who is outside the Republic of South Africa ("the RSA") at the time the services are rendered. There are various other zero-rated opportunities for services and vendors must ensure that it complies with all the requirements to avoid being held liable for the VAT.

There can be numerous reasons for SARS to disallow an input tax claim including but not limited to: failure by the Taxpayer to provide the required source documentation to SARS, claiming input tax deductions related to the making of exempt supplies, certain expenses not allowed such as entertainment, tax invoices/source documents not complying with the provisions of the VAT law.

Unless the supply of goods or services are zero-rated in terms of VAT law, the consideration for a supply together with the VAT charged must be reflected/converted into South African currency on the tax invoice.

There are various channels for a Taxpayer to follow which is either based on law or provided by SARS as a complaint management process. The Office of the Tax Ombud can also be utilised where SARS do not comply with its administrative obligations. Taxpayers must ensure that the correct process is followed when engaging SARS to avoid further delays.