Zero Rate Tax in terms of Section 11(1)(e) of the Value Added Tax Act 89 of 1991

In order to qualify for zero % tax in the sale of a business, it must be a ‘going concern’

The following requirements must be met:

• The seller and purchaser must be registered vendors (a notice of registration stands as prima facie proof)
  • a vendor is someone who has taxable supplies that exceed R1 000 000 in any 12 months
• The supply must consist of an enterprise which is capable of separate operation
• Parties must agree in writing that the supply is a going concern
• The seller and the purchaser must, as a condition of the agreement, agree in writing that the enterprise will be an income-earning activity on that date of transfer thereof
• Assets necessary for carrying on enterprise must be disposed of to purchaser
• Parties must agree in writing that the consideration for supply includes VAT at zero rate.