WHO CAN CANCEL VAT REGISTRATION?
- the value of taxable supplies will be less than the compulsory registration threshold of R1 million in any consecutive period of 12 months, or
- the vendor has ceased to carry on all enterprises.
If the vendor has ceased to carry on all enterprises, the vendor must also state the date of cessation of the enterprises and whether it intends to carry on any enterprise within 12 months from date of cessation.
The Commissioner may cancel the VAT registration of a vendor if –
- the value of taxable supplies will be less than the voluntary registration threshold of R50 000 in any consecutive period of 12 months; or
- the vendor was registered under the voluntary registration category and –
- has not fixed place of abode or business;
- does not keep proper accounting records;
- has not opened a bank account in respect of the enterprise; or
- was previously registered as under the VAT Act or Sales Tax Act and failed to perform any duty imposed under those Acts.
In the case where the vendor has ceased all enterprises, the cancellation normally takes effect from the last day of the tax period in which the vendor ceased to carry on all enterprises. In any other case, the Commissioner will decide the date of cancellation and final tax period for which a vendor is required to submit its VAT return.
What is the process of cancellation of VAT registration?
1) Ordinary cancellation process
1. Applicant fills in and submits VAT 123e – Application for the cancellation of registration of a person in respect of all his enterprises form.
- The application form for cancellation of registration must be submitted to the SARS branch where the vendor is registered and the circumstances under which the cancellation is requested must be clearly stated on the form or in a separate letter
2. SARS responds by a letter of Acknowledgement also advising on final tax periods
The letter of acknowledgement from SARS will provide further instructions regarding the cancellation process. The vendor must continue to charge and declare VAT on supplies made and deduct any input tax up to the last day of final tax period as will be advised by SARS.
3. Applicant declares Output tax in field 1A of final return
- Exit VAT must be declared together with any other VAT due or refundable for that final tax period in the final VAT return.
4. Applicant’s VAT registration is cancelled