Deemed Input VAT: A Guide for VAT-Registered Buyers

Are you a VAT-registered buyer planning to purchase commercial or business property from a seller who is not VAT-registered? Understanding deemed input VAT is essential for managing such transactions effectively. Here is everything you need to know.

What is deemed input VAT?

Deemed input VAT is a key concept for VAT-registered buyers. When you buy property from a non-VAT-registered seller, SARS (South African Revenue Service) assumes that VAT is included in the purchase price. This means you can claim this VAT as deemed input VAT, even though the seller did not separately invoice you for VAT.

How to claim your VAT refund

Follow these steps to ensure a smooth VAT refund process:

• Wait for registration. You can only claim the VAT refund after the property has been officially registered in your name at the deeds office.
• Prepare documentation. During a SARS audit, you will need to provide a copy of the title deed and the sale agreement.
• Provide motivation. You must explain in detail how you will use the property for business purposes that produce taxable supplies.

Tips for a smooth VAT refund process

Navigating the VAT refund process can be complex. To avoid delays:

• Ensure all documents are accurate and complete before submission.
• Submit all required documentation correctly from the start.
• Keep records of how the property is used in your business so that you can respond fast to a SARS audit query.

Important update

The VAT refund process is no longer limited to transfer duty. Recent changes in legislation allow buyers to claim the full 15% VAT included in the purchase price. This is the deemed input VAT principle, under which VAT is assumed to be part of the purchase price even where the seller is not a VAT vendor.

Related Africa Estate guidance

• Deemed input VAT on farm purchases: the same principle applied to agricultural property transactions, with the farm-specific FICA, agricultural-zoning and SARS audit considerations.
• Transfer duty for residential property: the parallel position on residential transactions where VAT does not apply.
• Africa Estate Agricultural Authority Centre: full library of farm-purchase, valuation and statute guides.

For personalised advice on a commercial, agricultural or business property transaction involving deemed input VAT, contact Africa Estate. We work alongside your tax practitioner and conveyancer to keep the SARS claim clean.

This article is informational and does not constitute tax advice. Always confirm the VAT position with your registered tax practitioner and the transferring attorney before signing an offer to purchase.