HOW TO CHOOSE BETWEEN STANDARD TAX SYSTEMS AND TURNOVER TAX

Businesses that qualify for turnover tax can choose to register for the standard tax system or turnover tax. Factors that may help with this decision are:

– Record-keeping – if this is too much of a burden or too expensive, the turnover tax        will be a better option.

– Meeting the requirements of the standard tax system – if this is technically too difficult        or too expensive to comply with, then the turnover tax is a better option.

– Meeting the requirements of the standard tax system by hiring a tax practitioner – if        this is too costly then the turnover tax is a better option.

– Is the business in a taxable income/assessed loss situation? if it is in a loss situation –        the standard tax system will be a better option as no income tax will be payable but        records must be maintained and the tax legal requirements must be complied with.

– Will the tax payable in the standard tax system be less than the turnover tax? If so, the        standard tax system will be a better option but records must be maintained and the tax        legal requirements must be complied with. The compliance costs must also be factored        into the decision.

– Do the main clients of the business prefer to deal with a business that is registered for        VAT as an indication of formality and good standing? Although business is not forced        to comply with this requirement, the business can consider registering for VAT to        secure the relevant client base. A business cannot be registered for Turnover Tax and        VAT.

via ARTRIGHT | Turnover Tax.

Leave a Reply

Your email address will not be published.