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VAT in South Africa

VAT in South Africa

VAT in South Africa is an indirect consumption tax for which a pre-determined registration threshold is in place.

Below, our team of lawyers in South Africa answers several common questions about this tax and can assist clients who exceed the threshold and need to register.

We are a full-service law firm that offers solutions for local and foreign investors. We provide legal guidance and representation across many areas of law, and we also specialize in taxation matters and corporate tax laws.

If you need more information than the data presented herein, please do not hesitate to reach out to us for personalized assistance in 2024.

How can a foreign company register for VAT in South Africa?

Compulsory VAT registration applies in the case of all companies, including foreign entities, and foreign entities that provide electronic services to South African customers, when they exceed the prescribed value of taxable supplies of R1 million in a 12-month period.

Foreign companies can perform the VAT registration phase with the help of an intermediary, an appointed party who will act on the foreign company’s behalf.

VAT registration in South Africa in 2024 also applies to foreign electronic service entities when the total value of their supplies exceeds the threshold within a 12-month period.

The following steps are relevant for the VAT registration of foreign companies in South Africa:

  • fill in the VAT application form;
  • sign the form and attach the supporting documents;
  • send the application online and wait for its processing.

The Commissioner for the South African Revenue Service evaluates the VAT registration application and may when deemed necessary, ask for additional documents or clarifications.

Once the evaluation is completed, the Commissioner will set forth the date from which the foreign company shall start charging VAT at the standard rate (or as it applies in its case, according to the types of services).

What is the VAT registration process for resident companies?

Locally registered companies are subject to the VAT registration threshold also mentioned above.

A South African company will register for VAT when it carries our VAT-taxable supplies and:

  • the value of these taxable supplies made in a 12-month period (consecutive months) exceeds or is likely to exceed R1 million; or
  • when the company has entered into a services agreement for which the value of the taxable supplies will exceed the

The registration process also relies on filling out the electronic VAT registration form, as well as preparing additional documents attesting to the company’s registration and business license.

Our team of lawyers can provide assistance during the process of VAT registration in South Africa in 2024.

Reach out to us for details, as well as assistance throughout all the other company formation stages.

VAT and other tax matters are important issues for all investors who open a company in South Africa. Our team assists entrepreneurs from the very beginning, as early as choosing the suitable business form for their future activities. You can rely on our assistance not only for taxation compliance (including the VAT), but also for other corporate and business compliance issues.

What are the main rates for VAT in South Africa?

The standard value-added tax rate in South Africa is 15%, with certain types of transactions being rated 0% or exempt.

Examples of exempt supplies include the following: financial services (life insurance, the services offered by some benefits funds, buying and selling cryptocurrency), and educational services offered by recognized educational institutions (schools, technical colleges, and universities in South Africa).

Upon request, our tax attorney in South Africa can give you details about the rates of other applicable taxes, such as:

  • the 27% corporate income tax rate;
  • the 1% of the gross income social security contribution on the part of the employer and the 1% payroll tax (as well as other taxes for employers);
  • other taxes such as the real property tax or the 0.25% securities transfer tax, among others.

What are the general VAT reporting requirements?

Companies are expected to observe the following requirements:

  • value-added tax returns are submitted once every 2 months in most cases;
  • companies with an annual turnover of more than ZAR 30 million will submit monthly returns;
  • the return is submitted 25 days following the end of the tax period;
  • when the return is submitted, the payment is made in full;
  • companies can also file the returns and make the payments electronically and in this case, they will pay the value-added tax on the last business day of the month following the end of the tax period.

Our accountants in South Africa can answer more detailed questions upon request.

Investors in South Africa who are interested in the taxation of their business can also reach out to our team specializing in South African immigration. We can help them apply for a residence permit that will allow them to remain in the country and manage their business. Together with our team, investors will be able to prepare the needed documents, as well as take into account the conditions the business itself needs to satisfy in order to be considered eligible.

According to the World Investment Report 2023 issued by the United Nations Conference on Trade and Development, foreign direct investment in South Africa reached $9.1 billion in 2022. This is double the average of FDI of the last decade. The same report highlighted the fact that in 2022 the economy of South Africa was an important one in terms of renewable energy projects.

More data from the South African Reserve Bank shows that the country recorded an approximate inflow of foreign direct investment of ZAR 53.8 billion (or about USD 2.8 billion) during the second quarter of 2023. This is an increase compared to the FDI received in the first quarter.

If you are not a business owner but are interested in the ways in which you can relocate to the country, our team can also answer questions about the other available types of visas. Remaining in the country for temporary purposes is possible once the applicant is accepted for his or her particular purpose of stay. We also assist those who wish to apply for South African permanent residence.

Contact our law firm in South Africa for more information about tax matters in 2024.