VAT Glossary
Understanding VAT terminology is essential for compliance and effective tax management. This glossary provides definitions of commonly used VAT terms in South Africa, including input VAT, output VAT, zero-rated and exempt supplies, VAT registration, VAT returns, and other critical concepts to help businesses stay compliant and informed.
| Term | Definition |
|---|---|
| VAT (Value-Added Tax) | A tax levied on the supply of goods and services, collected by registered vendors on behalf of SARS. |
| Input VAT | The VAT a business pays on goods and services purchased for business purposes, which may be claimed against output VAT. |
| Output VAT | The VAT charged by a vendor on the supply of taxable goods or services, payable to SARS after deducting input VAT. |
| Zero-Rated Supplies | Goods or services taxed at a VAT rate of 0%, such as basic food items and exports, allowing input VAT to still be claimed. |
| Exempt Supplies | Supplies that are not subject to VAT, and no input VAT may be claimed, such as financial services or residential rental income. |
| VAT Registration | The process of registering a business with SARS for VAT purposes once turnover thresholds are met or voluntarily. |
| VAT201 | The official SARS VAT return form used to report output and input VAT and calculate amounts payable or refundable. |
| Deregistration | The process of cancelling VAT registration with SARS when a business ceases trading or falls below the VAT threshold. |
| Taxable Supplies | Supplies subject to VAT at the standard or zero rate, excluding exempt supplies. |
| Exemptions & Reliefs | Special provisions in the VAT Act that exclude certain goods, services, or entities from VAT obligations. |
Tip: Familiarity with VAT terminology helps businesses complete VAT returns accurately,
claim correct input VAT, and avoid errors that could result in SARS penalties or audits.