Most Read Contributor in South Africa, September 2016
Where a vendor files its value-added tax ("VAT")
returns electronically via the South African Revenue Service's
("SARS") e-Filing system, the vendor was entitled, in
terms of proviso (iii) to section 28(1) of the Value-Added Tax Act
("the VAT Act") to submit the VAT return and to make
payment of the VAT on or before the last business day of the month
following the end of the vendor's tax period.
Proviso (iii) of the VAT Act was amended with effect from 1
October 2012 by the Tax Administration Act ("the TAA") to
delete the entitlement of a vendor to file its VAT returns by the
last business day of the month. The effect of the amendment
was that the vendor is obliged to file the VAT return on or before
the 25th day of the month following the end of the tax period, but
the vendor is still entitled to make payment on or before the last
business day of the month.
The amendment created uncertainty with regard to the date when
VAT returns must be submitted in order to avoid penalties and
criminal prosecution. An opinion issued by SARS confirming
that as from 1 October 2012 VAT returns must be submitted by the
25th day of the month even though payment may still be made on or
before the last business day of the month, added to the
The uncertainty was whether the amendment effected by the TAA
applied to all VAT returns to be submitted electronically on or
after 1 October 2012 (which would have included the VAT returns for
September) or only for VAT returns in respect of tax periods ending
on or after 1 October 2012. It was further unclear as to why
a vendor would be required to submit his VAT return by the 25th day
of the month, but is allowed to make payment only by the last
business day of the month.
Fortunately, sanity prevailed and SARS issued a notice on 19
October 2012 in which it clarified that SARS does not require
vendors to submit their electronic VAT returns by the 25th day of
the month. Vendors may continue to file their VAT returns and
make payment on or before the last business day of the month
following the end of a tax period without running the risk of
penalties, interest or criminal prosecution.
SARS also advised that proviso (iii) to section 28(1) by the TAA
will be amended again in the 2012 Tax Administration Amendment Bill
to clarify the position.
It is important to note if a vendor fails to submit a VAT return
by the last business day of the month following the end of a tax
period as provided for in section 28(1), the vendor is guilty of an
offence and is liable on conviction to a fine or to imprisonment
for a period up to 24 months.
If payment of the VAT is not made in full on or before the last
business day of the month following the end of a tax period, then
the vendor is liable for a late payment penalty of 10% of the VAT
amount payable. The vendor will also be liable for interest
with effect from the 25th day of the month in which the payment
should have been made.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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