The Small Retailers VAT Package

The Small Retailers VAT Package is a simpler VAT option for small retailers and forms part of SARS' drive to assist certain small businesses. If you qualify for this package it means that you can satisfy the VAT Act without detailed recordkeeping or having to buy expensive cash registers to keep track of sales on the various types of products you sell.

This package also includes a free set of pre-printed books in which you keep track of the stock you buy and your daily sales. In short, you get to spend more time and money growing your business. This is not only important for the success of your business, but also supports the continued growth of our economy.

Why was the Small Retailers VAT Package introduced?

To make it simpler for small retailers who are registered for VAT

SARS recognises that small retailers find it difficult and time consuming to keep the detailed sales records required by the VAT Act. The Small Retailers VAT Package is designed to cut through these problems and make accounting for VAT simpler for small retailers.

To make it simpler for small retailers who are not registered for VAT to satisfy the law

All retailers who have a turnover of R300 000 or more per year must register for VAT. There are many small retailers who should register for VAT but do not. However, SARS recognises that this is often due to a lack of knowledge or because small retailers feel that the process is too complicated and time consuming.

While this is not a valid excuse for not registering, SARS has tried to resolve the problem by introducing the Small Retailers VAT Package. Unregistered retailers are thus encouraged to register for VAT and apply for this package.

To reduce VAT fraud

SARS is aware that some retailers abuse VAT through dishonest reporting of sales information. There are also retailers who knowingly avoid registering for VAT when they are required to do so. These practices are regarded as serious criminal acts and SARS will increase its audit activity among retailers to identify such retailers.

Who qualifies for the Small Retailers VAT Package?

If you are not registered for VAT, you will first have to register for VAT before you can apply for the Small Retailers VAT Package. You can do so by visiting a SARS office or by calling the SARS Call Centre on 0860 12 12 18.

Alternatively, visit the SARS website at www.sars.gov.za for more information. If you are already registered for VAT, you qualify for the Small Retailers VAT Package only if you satisfy the requirements to become an approved vendor.

To be an approved vendor you must:

• Sell standard-rated goods (i.e. goods taxed at 14% VAT) as well as zero-rated goods (i.e. goods taxed at 0%) from the same place of business
• Make taxable supplies (excluding VAT) of less than R1 million in any 12 month period
• Not have adequate point of sale equipment i.e. an electronic scanning system; or a touch screen register; or a product-specific cash register which is able to separately record zero-rated and standard-rated sales

If you meet all these requirements, you may apply by completing a form (VAT SRVP1) and delivering it to the nearest SARS office or mail box. If your application is approved, you will receive written notification on a form SRVP2, a set of pre-printed record books and a detailed guide that explains all aspects of the Package.

Important points to take note of

• If you have been accepted into the Small Retailers VAT Package and then decide, at some time in the future, to return to the normal VAT scheme you may apply to do so. Your reasons and circumstances will be taken into account when SARS assesses your application
• Retailers who are not currently registered for VAT are encouraged to come forward and register voluntarily. SARS' Voluntary Disclosure Dispensation allows for the conditional waiving of penalties or additional tax provided that the taxpayer approaches SARS voluntarily before an investigation of his or her affairs has commenced
• The industry mark-up percentage of 40% used in the Small Retailers VAT Package is an average rate used to simplify the calculation of VAT. It should NOT be interpreted as the mark-up you should actually charge your customers on zero-rated goods

The full technical detail of the Package is contained in a guide: SRVP 416.

How does the Small Retailers VAT Package work?

The Small Retailers VAT Package allows you to determine your output tax liability by applying the following method:

Step 1: Calculate your daily gross takings inclusive of VAT over a period of 2 months.

Step 2: Calculate the value of your zero-rated sales by adding the value of the Industry Mark-up Percentage to total zero-rated purchases that you used to make zero-rated supplies.

Step 3: Calculate your standard-rated sales by deducting the zero-rated sales (from step 2) from your daily gross takings.

Step 4: Apply the 14% tax fraction (14/114) to the total standard-rated sales determined in step 3.

Step 5: Account for the output tax in your VAT201 return.

Requirements of a valid tax invoice

A vendor must be in possession of a valid tax invoice in order to claim input tax. The following information must be reflected on a tax invoice:

• The words "Tax Invoice" in a prominent place
• The name, address and VAT registration number of the supplier
• The name, address and VAT registration number of the recipient
• An individual serialised number and the date upon which the tax invoice is issued
• A full and proper description of the goods or services supplied (indicating, where applicable, that the goods are second-hand goods)
• The quantity or volume of the goods or services supplied
• Either - the value of the supply, the amount of tax charged and the consideration for the supply; or
• where the amount of tax charged is calculated by applying the tax fraction to the consideration, the consideration for the supply and either the amount of the tax charged, or a statement that it includes a charge in respect of the tax and the rate at which the tax is charged
• Where the consideration for the supply does not exceed R3 000, an abridged tax invoice may be issued. An abridged tax invoice contains the same information as a tax invoice, except that the quantity or volume of the goods or services supplied and recipient's particulars need not appear on the document

For more on this and other tax issues, and to download the relevant forms, visit the SARS website.