FAQ- Must a sole trader who has two businesses register for VAT when both reach the compulsory VAT threshold?

By in Blog, VAT on March 19, 2015

Author: SAIT Technical

Q: My client trades as a sole proprietor. She has two separate businesses. Must she register for VAT when one business reaches R1million turnover or when the combined turnover for both entities reaches R1million? 2nd question: if she must register because combined turnover is over R1million – does she need to get two VAT numbers (one for each entity)?

A: The requirement to register as a vendor applies to the person and not to the activities carried on by the person.  Once the activity is an enterprise activity (taxable supplies) and the section 23 threshold is exceeded the obligation arises and the person must register.  The person is then registered in respect of all enterprise activities and only needs one VAT-registration number.

The Act allows for the person to separately register activities as a branch, but we assume this is not what is intended here.  A branch or division of a vendor can be separately registered as a vendor under the provisions of section 50 of the VAT Act.

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.

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