VAT FAQ — South Africa

The current South African VAT rate is 15%, effective 1 April 2018. The rate was 14% from 1993 to 2018. South Africa has one standard rate (15%), with some supplies zero-rated at 0% (basic foodstuffs, exported goods) or exempt (residential rent, financial services, educational services).

Zero-rated supplies attract VAT at 0% — you still charge VAT (at 0%) and can claim back input VAT on your purchases. Examples: brown bread, maize meal, milk, eggs, fruit and vegetables, exported goods.

Exempt supplies fall outside the VAT system entirely — you do not charge VAT and cannot claim input VAT on related purchases. Examples: residential property rental, public road and rail passenger transport, educational services by approved institutions, financial services.

Output VAT is the 15% VAT you collect from your customers on your sales. Input VAT is the 15% VAT you pay on your business purchases and expenses. Each VAT period, you pay SARS the difference: output VAT minus input VAT. If your input VAT exceeds your output VAT (e.g. you exported goods), SARS refunds you.

Multiply the VAT-exclusive price by 1.15.
Example: R1,000 excl. × 1.15 = R1,150 incl. VAT (VAT = R150).
Use our VAT Calculator to do this instantly.

Divide the VAT-inclusive price by 1.15.
Example: R1,150 ÷ 1.15 = R1,000 excl. VAT (VAT portion = R150).

⚠ Common mistake: Do NOT multiply by 0.85 — that gives R977.50, which is wrong. The VAT was applied to the excl. price, so you must divide to reverse it correctly.

VAT portion = incl. price − (incl. price ÷ 1.15).
Example: R1,150 − (R1,150 ÷ 1.15) = R1,150 − R1,000 = R150 VAT.
Or equivalently: VAT = incl. price × (15/115) = incl. price × 0.130435.

You must register for VAT once your taxable turnover exceeds or is likely to exceed R1 million in any 12-month period. You must register within 21 business days of this happening. Voluntary registration is allowed once your turnover exceeds R50,000 per year. See our VAT Registration Guide for the step-by-step process.

Possibly — it depends on your clients. If you sell mainly to VAT-registered businesses, they can claim back the VAT you charge, so it costs them nothing extra. You benefit by reclaiming VAT on your own business purchases. If you sell mainly to consumers or exempt businesses (who cannot reclaim VAT), registering increases your prices by 15% without benefit to your clients — usually a disadvantage.

A South African VAT registration number is a 10-digit number starting with the digit 4, issued by SARS. Format: 4xxxxxxxxx. It must appear on all tax invoices you issue once you're registered.

A valid SARS tax invoice must include: the words "Tax Invoice"; your VAT registration number; a sequential invoice number; the date; your business name and address; the client's name and address (for invoices over R5,000); a description of goods/services; quantity; VAT-exclusive price; VAT amount at 15%; and the VAT-inclusive total. Use our Invoice Generator to create a compliant invoice.

Yes, but it must NOT contain the words "Tax Invoice" or show a VAT amount. It should be an ordinary invoice showing the total amount due. You must also not have a VAT number on it. Only VAT-registered vendors may issue tax invoices.

Most businesses submit a VAT201 return every 2 months (bi-monthly). The return and payment are due by the last business day of the month following the end of your VAT period if paying by EFT, or the 25th of the month if paying at a bank. eFiling via SARS eFiling is the standard method.

SARS imposes a 10% penalty on the outstanding VAT amount for late payment. Interest also accrues at the prescribed rate (currently around 10.5% per year). Late submission of a nil return also attracts a fixed penalty. Always submit on time even if you cannot pay — non-submission is treated more severely than late payment.