Only a registered vendor may charge VAT. Charging VAT without that registration is not a pricing decision. If you are not registered, adding 15% to your invoice is not a pricing decision, it is a contravention of the VAT Act, and the amount collected is not yours to keep.
How it happens
- A template. An invoice template with a VAT line that nobody removed.
- A client asked for it. A corporate client requests a tax invoice, and an unregistered supplier produces one rather than explaining.
- Waiting on registration. The application is in, the number has not arrived, and invoicing continues with VAT added.
- Confusion with the threshold. Passing R2.3 million in turnover creates an obligation to register. It does not, by itself, make you registered.
The third one is the most common and the most understandable. It is still not permitted.
What to do instead of charging VAT
- Issue an ordinary invoice, not a tax invoice. Do not use the words Tax Invoice.
- Show one price with no VAT line at all. Not a zero VAT line, no line.
- Do not show a VAT number, because you do not have one.
- If a client insists on a tax invoice, tell them you are not a registered vendor. It is a normal answer and they will have supplier categories for it.
If it has already happened
Do not simply carry on. The amount charged as VAT was collected without entitlement, and the position needs sorting out properly rather than quietly.
Speak to a registered tax practitioner about your specific circumstances. Typically it involves correcting the documents with your clients and dealing with the amounts collected. How that is handled depends on how much, how long and whether registration has since happened, which is why this is one of the few places on this site where the honest answer is to get advice rather than follow a checklist.
Common questions
Can I charge VAT while my registration is being processed?
Not before you are registered. Discuss the timing with a practitioner if it affects your pricing.
What if a client refuses to work with non-VAT suppliers?
Some do, particularly on tenders. That is a commercial reason to consider voluntary registration, not a reason to charge VAT you cannot charge.
Is it different for a small amount?
No. The rule does not scale with the invoice.
Set your VAT status once and your documents match it, with no stray VAT line to remove.
Start invoicing- Value-Added Tax Act 89 of 1991
- SARS, Value-Added Tax
Disclaimer: This content is for general information only and does not constitute legal, tax, accounting or financial advice. Always confirm important requirements with SARS, the relevant authority or a qualified professional.
