As a result of the effect of the Covid-19 pandemic on South Africa, a number of clients/businesses are likely to be having cash flow issues. SARS has implemented the fast-tracking of VAT refunds to alleviate cash flow problems for vendors by allowing bi-monthly registered vendors to submit monthly VAT returns.
This amendment will benefit vendors who are usually in a refund position. Vendors that are usually in a payable position will not have to submit monthly VAT returns.
In order to take advantage of this amendment, vendors are required to be registered with a Category A tax period which ends at the end of January, March, July, September, and November or a Category B tax period which ends at the end of February, April, June, August, October and December.
It is important to note that the change will only temporarily allow Category A and B vendors to submit monthly VAT returns.
This amendment will be deemed to come into effect on 1 May 2020 and will apply for the April to July 2020 tax periods. Should a vendor elect to submit monthly VAT returns temporarily, a Category A vendor will only be able to submit a monthly VAT return for the April, May, June, and July 2020 VAT return. Accordingly, a Category B vendor will only be able to submit a monthly VAT return for the May, June, and July VAT return. However, where a Category B vendor submits a monthly VAT return for July 2020, a monthly VAT return will also be required to be submitted for August 2020 in order to align the vendor to the normal Category B bi-monthly cycle.
It is, again, important to note that this is a temporary amendment with the general concessions above as we understand them to be. SARS is in the process of fine-tuning the procedure and will release further information where required in due course. Should you have any queries, please do not hesitate to contact Leonard Willemse or Leila Wright.