As indicated before regarding the Economic Recovery Plan for South Africa, announced by President Ramaphosa on 21 April 2020, various tax relief incentives have been introduced in order to provide businesses which have been negatively affected by the COVID-19 lockdown with breathing room and to assist their cash flows. One such tax relief measure is the fast-tracking in respect of VAT refunds to businesses.
In terms of this relief measure, VAT vendors who are registered to file VAT returns on a bi-monthly basis are permitted to file VAT returns on a monthly basis, therefore permitting the earlier unlocking of any VAT refunds due to them. It should be kept in mind that any output tax attributable to supplies made during the particular month must be declared in line with time of supply rules in the month for which the VAT return is filed.
This tax relief measure will be in effect for a maximum period of four months as follows:
- VAT vendors, currently registered under Category A*, will be permitted to file monthly VAT returns for the April 2020 to May 2020 tax periods and June 2020 to July 2020 tax periods, should such VAT vendors elect to do so.
- VAT vendors, currently registered under Category B+, will be permitted to file monthly VAT returns for the May 2020 to June 2020 tax periods and July 2020 to August 2020 tax period, should such VAT vendors elect to do so.
- It should be noted that in the event that a VAT vendor, currently registered under Category B, elects to file a monthly VAT return for July 2020 (as this will result in a VAT refund), a monthly VAT return for August 2020 (whether it results in a VAT refund or not) will be required to be filed in order to close off the normal bi-monthly filing cycle.
- Therefore, in terms of this tax relief scheme, it will not be required for Category A and B vendors to apply for their category to be amended to Category C (being the monthly filing category).
- If a VAT vendor is entitled to a refund, SARS will be required to pay such VAT refund within 21 business days of receiving the correctly completed VAT return in respect of that VAT refund, without incurring any interest on such refund.
In order to qualify for relief under this tax relief scheme, VAT vendors must -
- already be registered under either Category A or B with SARS;
- be fully compliant with their tax obligations, meaning that businesses must be registered for all required taxes and have no outstanding returns for any taxes for which they are registered; and
- have no outstanding tax debt.
Further information and practical examples pertaining to this relief measure can be found at https://www.sars.gov.za/TaxTypes/VAT/Pages/FAQs-for-VAT-vendors-on-Tax-Relief.aspx.
For the moment and at date of publication, this is the information we have obtained. We will keep you updated should any further relevant information come to our attention.
You are also welcome to visit our website at https://www.phinc.co.za/NewsResources.aspx to view previous advisories from us.Although we have used our best efforts to ensure that all information contained in this communication is accurate as at the date hereof, we cannot guarantee the accuracy thereof and recommend verification thereof before use.*Category A:
Under this category, a vendor is required to submit one return for every two calendar months, ending on the last day of January, March, May, July, September and November.+Category B:
Under this category, a vendor is required to submit one return for every two calendar months, ending on the last day of February, April, June, August, October and December.