The government of any country needs money to run the place – to build and maintain airports, railway systems, roads, hospitals, to keep a police force, army, navy and the air force. The most basic way for a government to get money is to tax its citizens, and very clever people in finance ministries around the world are always coming up with ways to impose taxes.1
It used to be called ‘sales tax’, but is now ‘value-added-tax’ – or, simply, VAT. This is an additional amount, that is paid over and above the real purchase price, when you buy goods or use someone’s services. Basically, the person who sells you the goods, or renders the service, must charge you an additional 14% on his actual selling price, and pay this VAT over to the South African Revenue Service.
The Value-Added-Tax Act 19912 is the statute which provides for the imposition and collection of VAT in South Africa. Like other taxation legislation, it follows under the authority of the Minister of Finance, who is also the Commission of SARS (South African Revenue Services) and who is responsible for carrying out the provisions of the Act. As might be guessed, the VAT Act, is long and involved, and definitely not holiday reading.
There are a host of prohibitions in the VAT Act but, as is the case with Income Tax, the Tax Administration Act has incorporated offences concerning VAT. The VAT Act has, however, retained some criminal provisions.
A. Tax returns and payments
- A ‘return’ is just a formalised report submitted to an authority as is prescribed by legislation or regulation. In the case of VAT, every person who is required to be registered under the Act must file a return relating to the tax period applicable to him,3 and which reflects whatever information as may be required for calculating the tax due; calculate the tax, and pay it across. It is an offence to fail to comply with this section.4
B. Imported services
If you use the services of someone based outside of the Republic, within 30 days of receiving his invoice or paying him (which ever event happens first) you must furnish the Commissioner with a return, as prescribed, calculate the tax payable – on the basis set out in the Act5 and pay it across. It is an offence to fail to comply with this provision.6
The most obvious form of taxation is income tax. There is also, for example: (a) capital gains tax: which is an amount calculated on the increase in value (in other words, capital gain) on property when you sell it compared with its costs price; (b) so-called ‘sin-tax’: included in the price you pay for cigarettes and alcohol is an amount which is actually a tax to be paid across to the government. ↩
As amended; the latest amendment was effected by Act 44 of 2014. ↩
This depends on the category in which you are registered, and that depends on the nature of your business. The tax periods are either every one month, two months, four months, six month or 12 months. ↩
Section 28(1) read together with section 58. ↩
See section 14(4) of the Act. ↩
Section 14 read together with section 58. ↩