Let’s talk more VAT! There are 2 types of VAT basis types, the invoice basis and the payments basis.

When registering for VAT, the automatic VAT basis type a vendor will be registered on by SARS will be the invoice basis. The invoice basis means that when you issue an invoice to a customer, VAT needs to be declared and paid to SARS as per the invoice issued date, irrespective of when payment is made by your customer to you. CASH FLOW NIGHTMARE if your customers take more than 30 days to pay you and if you are operating as a small business.

The payments basis means that you only need to declared and pay the VAT over to SARS once your customer has paid the invoice that you have issued to them.

There are certain requirements and qualifying individuals and companies that can be registered on the payments basis. Please ensure that you or your accountant are checking this sort of stuff. It makes a massive difference to cash flow management, especially for the smaller guys who qualify!

Qualifying VAT vendors for payments basis include:

• Vendors who are natural persons (or partnerships consisting only of natural persons) whose total taxable supplies at the end of a tax period have not
exceeded R2,5 million in the previous 12 months, and are not likely to exceed R2,5 million in the next 12
months.
• Public authorities, water boards, certain municipal entities, municipalities, associations not for gain and welfare organisations – regardless of the value of
taxable supplies.
• Vendors who are non-resident suppliers of certain electronic services or intermediaries through which such supplies are made.
• Certain vendors that have been allowed to register voluntarily in accordance with section 23(3)(b)(ii) must account for VAT on the payments basis until
the R50 000 threshold is met.
• The South African Broadcasting Corporation as contemplated in section 8A of the Broadcasting Act 4 of 1999.
Juristic persons (for example, companies) and trusts do not qualify for the payments
basis unless they are the type of entity included in any of those listed above.
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