VAT

It is not possible to be 'exempt' from paying VAT.  VAT is a transaction-based tax, and VATable supplies or services by a VAT vendor will attract VAT at 14%.

An NGO cannot get out of paying VAT, but may recover the VAT amounts it pays on supplies and services if it itself is registered as a VAT vendor.

The general rule is that one may elect to register as a VAT vendor if one makes taxable supplies of at least R50 000 per annum, and one has to register as a vendor once one makes supplies of R1 million or more per annum.

However, even where supplies made are under R50 000, you may register a vendor if:
•you make some supplies but are an ‘association not for gain’, or
•you make no supplies at all, if you are a ‘welfare organisation’ as defined.

 Whether you qualify as a ‘welfare organisation’ depends on what category of 'public benefit activity' you fall under.

If all of your supplies are 'exempt supplies' as defined, then you may not register as a vendor.

Organisations which qualify to register as a vendor should assess whether the amount of VAT that would be recovered, would justify the administrative time  and paperwork required in making VAT returns, to decide whether to register as a vendor.