We as a firm have recently seen an influx of new companies registering with the Companies and Intellectual Property Commission (“the CIPC”). This is good news as it means that South Africa is seen as a viable investment platform for both foreign and local investors and businesses.

The initial registration process is not an overly complex one, making the barrier to South African entry quite manageable for local and international entrepreneurs alike. This is until companies come to the daunting Value-Added Tax (VAT) registration process.

The VAT registration is an onerous administrative process and can take an extensive amount of time, weeks if not months.

There is a deluge of original documents that need to be submitted to the South African Revenue Service (SARS) including, but not limited to the following:

  • Originally certified Director’s Identification Documents (IDs) for each Director. If the Director happens to live overseas then the originally certified or notarised Passport will have to be couriered to South Africa in order to be submitted to SARS. SARS only accepts the Passport if the certification is dated within three months. This means that if the process is delayed due to unforeseen circumstances, the foreign Director will have to courier the passport a second time.
  • An originally certified proof of address and ID of the Public Officer. This may not seem like a burdensome demand, unless of course, the company wishes to update their Public Officer or it is a new entity with no Public Officer appointed as yet. The process to appoint a Public Officer involves collation of various documents including a Resolution drafted and signed by all Directors at a board meeting appointing the Public Officer.
  • Originally stamped bank statements of no older than three months. If the client uses an international bank the tax practitioner cannot go in on behalf of the client. The Public Officer will need to make the trip to a local SARS branch themselves as per SARS regulation. We therefore recommend that all international businesses wishing to register a company in South Africa open a local bank account as it simplifies the process greatly.
  • Proof of turnover. This is the pièce de la résistance of the VAT registration. Clients often need a VAT number in order to apply for a tender to earn revenue and then ironically require the revenue earned from the tender in order to apply for a VAT registration. Clients may need to raise the first invoice in excess of R50 000 (The voluntary VAT registration threshold) with no VAT for services rendered or goods delivered in order to register.

Be this as it may, these regulations are here to stay and it is important for clients to adhere to the SARS rules and regulations to keep a clean slate from a compliance point of view. The best option is to comply with the documentation requirements and follow the advice and guidelines of your trusted tax practitioner.

Liezl Laughton

Trainee Accountant, Johannesburg

Also read: Section 6quin amendment – Foreign tax credits no longer deductible