Every person who conducts an enterprise and makes taxable supplies in excess of R 1 million in a consecutive 12-month period or has a contractual obligation to make taxable supplies in excess of R 1 million in a consecutive 12 month period is required to register as a VAT vendor. A person may choose to register voluntarily for VAT if it makes taxable supplies in excess of R 50 000 in a consecutive 12 month period.
A person conducts an enterprise when it conducts continuous or regular activities in or partly in South Africa and in the course or furtherance of which goods or services are supplied to any other person for consideration.
Once a person is registered for VAT (called a vendor), the vendor must levy and account for output tax on all taxable supplies made by it in the course and furtherance of its enterprise. Input tax may be deducted on the VAT incurred for purposes of making the taxable supplies.
Certain types of supplies may qualify as zero-rated or exempt from VAT. No output tax will be payable in respect of these supplies.