How to cancel a VAT registration – When the value of taxable supply is expected to be less than the threshold for mandatory registration, which is currently set at R1 million for any consecutive period of 12 months, a vendor is eligible to submit a request for cancellation of their VAT registration.
A VAT registration may also be canceled by the Commissioner in the following circumstances:
- The business was never really started, and it will not start up again within the next year; the vendor has halted all operations related to the business, and they will not resume operations within the next year.
- The merchant does not any longer fulfill all of the criteria for the voluntary registration;
either the seller did not submit the requisite return for the purposes of computing the tax, or the vendor was registered under the category of voluntary registration.
If the vendor has stopped all of their businesses, the cancellation will typically take effect on the final day of the tax period in which the vendor stopped carrying on any of their businesses. On the other hand, the Commissioner has the ability to decide that a different date will be the effective date.
Cancellation of a vendor’s registration may also apply to any of the vendor’s separately registered businesses, divisions, or branches if:
The transfer of all tasks to the primary registration occurs when a branch registration is canceled, which is the consequence of this action. It is important to remember that in the event that the VAT registration of the main registration is cancelled, this will also result in the cancellation of the VAT registration for any branches.
The minimum annual revenue requirement for a company to be required to register as a provider of international electronic services has raised from R50,000 to R1 million as of the first of April 2019. These vendors have the option to submit a request to have their VAT registration canceled if the value of the electronic services they provided to South African recipients in the prior twelve-month period was less than R1 million.
A helpful hint: SARS will not finalize the termination of your registration as a VAT vendor until all of the unresolved liabilities and responsibilities in accordance with the VAT Act have been paid.
What is the process of cancelling a VAT registration?
- The VAT 123e – Application for the cancellation of registration of a person in regard to all his businesses form has to be obtained, filled out, and an appointment needs to be made with a SARS branch before a vendor may cancel a VAT registration. To submit a request for the cancellation of a separately registered business, you will need to use the VAT123T form.
- It is required that the VAT123e be handed in to the SARS office that is responsible for the vendor’s registration. On the VAT123e, or in a separate letter that is attached to it, the event that gives rise to the cancellation has to be expressed in a clear and concise manner.
- The letter of acknowledgment will also tell the seller of the date on which the cancellation takes effect as well as the final tax period that will apply. This letter will be issued by the Commissioner. If you pay your VAT late, you will be subject to a penalty as well as interest.
- It’s possible that the letter of acknowledgment will include further information about the procedure for canceling the reservation. According to the Commissioner’s instructions, the vendor is obligated to continue with charging VAT on all supplies made, accounting for output tax, and deducting any input tax right up to the very last day of the final tax period.
- The output tax must be declared by the vendor in field 1A of that VAT return in regard to the final tax period (as determined by the Commissioner).
In the VAT return for the last tax period, exit VAT, also known as the output tax on assets on hand at the date of cessation, is required to be disclosed with any other output tax and input tax that was accrued during that final tax period.