Tax & SARS

VAT Is Paid by the Consumer, But Businesses Collect It

VAT is ultimately a tax on consumption — a VAT-registered business charges VAT on taxable supplies and accounts for it to SARS, meaning the VAT on a customer's invoice isn't simply additional profit for the business.

A business owner can make the dangerous mistake of treating VAT collected from customers as available business income. It isn't — VAT needs to be properly accounted for and paid over to SARS after considering allowable input tax.

Source: SARS

Frequently Asked Questions

Is VAT business income?

VAT collected on behalf of SARS should not simply be treated as the business's own income.

Can a VAT vendor claim VAT on business purchases?

Input tax can generally be claimed on qualifying purchases when the legal requirements are met.

Why do businesses sometimes owe SARS VAT even when sales are slow?

VAT liability depends on taxable supplies and allowable input tax, not simply whether the business feels profitable.

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