What is VAT in South Africa?
Value Added Tax (VAT) is a consumption tax levied on the supply of goods and services in South Africa. The standard rate is 15%, in effect since 1 April 2018 when it was raised from 14%. VAT is administered by the South African Revenue Service (SARS) and was first introduced on 30 September 1991 at 10%.
VAT is charged at each stage of the supply chain. Registered vendors collect VAT from their customers on behalf of SARS and can reclaim the VAT they paid on qualifying business purchases as an input tax credit. The end consumer ultimately bears the full cost.
VAT registration in South Africa
Businesses with taxable supplies exceeding R1 million in any 12-month period must register as VAT vendors with SARS. Voluntary registration is available for businesses with taxable supplies of at least R50,000 per year.
Once registered, vendors submit VAT returns (VAT201) on a monthly or bi-monthly basis, depending on their annual turnover. VAT payments and returns are submitted via the SARS eFiling portal.
Zero-rated and exempt supplies
Not all goods and services attract 15% VAT. Zero-rated supplies (0% VAT charged, input tax credits still claimable):
- Basic foodstuffs: brown bread, maize meal, samp, dried beans, lentils, rice, milk, eggs, cooking oil
- Fresh fruit and vegetables
- Pilchards and sardines in tins
- Sanitary products (pads and tampons — added 2019)
- Fuel subject to the fuel levy
- Exported goods and services
VAT-exempt supplies (no VAT charged, no input tax credit):
- Residential rental accommodation
- Financial services
- Educational services provided by public institutions
- Public road and railway transport
How to calculate 15% VAT in South Africa
To add VAT to a net price:
- VAT amount = Net price × 0.15
- Total (inc. VAT) = Net price × 1.15
- Example: R500 (ex. VAT) → Total = R500 × 1.15 = R575. VAT = R75.
To remove VAT from a gross price (reverse VAT):
- Net price = Gross price ÷ 1.15
- VAT amount = Gross price − Net price
- Example: R575 (inc. VAT) → Net = R575 ÷ 1.15 = R500. VAT = R75.