New VAT process

VAT registratation process changes dramatically. SARS has announced on Thursday 6 Nov 2008 changes to the VAT system

VAT Registrations were made easier by SARS from 1st of April 2008 by virtues of getting a VAT number "over the counter". This has enabled myfinance-online.co.za to give great service to businesses requiring a VAT number urgently. Unfortunetely the changes to the VAT system has made it impossible to render the service further. Therefore we had to remove this service from our website. All persons who has applied for VAT number recently and are still in progress will be contacted and refunded in full as SARS want to implement the new system as of Monday the 10th of November 2008, which will include the person requiring a VAT number to go to a SARS office themselves. See below an extract of the letter as received ftom SARS.

DATE:

6 November 2008

NOTICE NUMBER

25/2008

SUBJECT:

CHANGES TO THE VAT PROCESS

IMPORTANCE:

CRITICAL

 

Dear Colleague

 

 

 

SARS’ compliance strategy is premised on three pillars: education, service and enforcement – which of these elements SARS applies in a specific situation is typically dictated by the taxpayers’ attitude towards compliance. In recent months SARS has introduced a number of new processes and applications that were aimed at making it easier, faster and cheaper to comply in the VAT arena. However, SARS remains a regulatory body with an obligation to the fiscus, and our service offerings need to be balanced with the inherent risk that certain processes pose. Where our compliance assessment indicates that taxpayers – and specifically VAT vendors - are deliberately setting out to defraud the fiscus, the balance in this model between service and enforcement needs to be adjusted. 

 

The prevalence of VAT fraud and refund scams continues to grow, and SARS has noted a substantial increase in VAT refunds attributable to VAT fraud. In keeping with the principles of our compliance model, this requires a greater reliance on enforcement and assurance processes. We had been hoping to simplify the VAT registration process. Instead, as a result of the substantial impact that VAT fraud is having, SARS has had to review its VAT process to clamp down on fraudulent VAT claims. In the coming weeks we will be introducing a tightening of the VAT registration process, more closely monitoring the declarations made by vendors, reviewing actual payments against declarations, more closely reviewing refunded vendors with R0 turnovers, and resetting some of our systems stoppers and thresholds.

 

Some of the practical implications in the short term for practitioners
include:

*         VAT numbers will no longer be allocated on application, and
will only be provided to new vendors after all validations have been passed.

*         SARS will now be doing physical verification of new
applicants, with no refunds being paid out until an applicant’s registered particulars have been verified.

*         This will also require new VAT registrants to present
themselves in person at a SARS office, as fingerprinting of new registrants – using biometric scanning functionality - will in future become a compulsory part of the registration process.

*         VAT vendors will be required to confirm their SIC codes

*         FICA validations – new applicants will be required to submit
proof of residence (through eg a Telkom, utility or electricity bill).
The statement must be an original and not more than 3 months old.

*         Where vendors cannot be contacted or traced, their VAT
accounts may be suspended

 

As a result, we anticipate that new VAT registrations and VAT refunds may unfortunately take longer to process than they did in the past.

 

The changes are intended to go live on Monday 10 November 2008.