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Difference between Vat and Tax numbers



Leonie says:
29 March 2022 at 9:41

Q: What is the difference between a VAT registration number and a tax reference number. When do I use which one? Are they not the same thing?

TaxTim TaxTim says:
29 March 2022 at 18:20

  A: No, an Income Tax Number and VAT number are two totally different tax types. Income tax registration is compulsory whereas a VAT registration number depends on quite a few factors. The business must however be registered for income tax before a tax clearance or VAT number can be applied for. Your income tax reference number is a unique 10-digit number issued by SARS to a taxpayer on registration. If you earn a taxable income that is above the tax threshold you must register as a taxpayer with SARS and submit your annual tax returns. If you are registered, you can find your tax number on your: Notice of registration from SARS or any correspondence issued by SARS. A business receives a VAT number when registering for the VAT tax, therefore it is compulsory for a business to register for VAT if the total gross income made in any consecutive twelve-month period exceeds R1 million. VAT is imposed on most supplies of goods and services that are bought and sold. A business pays the government the VAT that it collects from the customers while it may also receive a refund from the government on VAT that it has paid to its suppliers.  

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