Value-added tax (VAT) is a tax on spending. In South Africa the standard rate is 15%, and it is collected bit by bit at each step of the supply chain — but in the end it is the final consumer who carries it.
Need a number now? The free South Africa VAT calculator adds or removes VAT, or works back from a VAT amount.
The core idea: output tax minus input tax
A registered business (a VAT vendor) deals with VAT in two directions:
- Output tax — the VAT it charges its customers on sales.
- Input tax — the VAT it pays its suppliers on qualifying business purchases.
For each tax period, the vendor pays SARS the difference: output tax minus input tax. If input tax is larger (for example in a month with a big equipment purchase), SARS owes the vendor a refund.
A worked example along the supply chain
| Step | Price excl. VAT | VAT charged (15%) | VAT claimed back | Paid to SARS |
|---|---|---|---|---|
| Manufacturer sells a table to a shop | R1,000 | R150 | — | R150 |
| Shop sells the table to you | R1,600 | R240 | R150 | R90 |
| Total | R240 |
You pay R1,840. SARS receives R240 in total — exactly 15% of the R1,600 final price — but it arrives in two parts from two businesses. Each business only pays VAT on the value it added: the manufacturer on R1,000, the shop on its R600 mark-up.
You, as a consumer, can’t claim anything back, so the R240 is your cost. That’s why VAT is called a consumption tax.
Who has to register
Businesses register with SARS as VAT vendors. At the time of writing:
- Registration is compulsory once taxable supplies exceed (or are expected to exceed) R2.3 million in a 12-month period. The threshold was R1 million until 31 March 2026.
- Voluntary registration is possible for smaller businesses that meet SARS’s conditions, including taxable supplies of more than R120,000 in the past 12 months (previously R50,000).
Both new thresholds took effect on 1 April 2026, following the 2026 Budget. Verified on 16 October 2026 against the SARS VAT page. Thresholds can change in any Budget, so check SARS before you rely on them. If you aren’t registered, you don’t charge VAT — see VAT-inclusive vs VAT-exclusive pricing for how that affects the prices you show.
Standard-rated, zero-rated and exempt
Not every sale carries 15%:
- Standard-rated (15%) — most goods and services.
- Zero-rated (0%) — VAT applies, but at 0%. Examples include exports and a list of basic foods such as brown bread, maize meal, rice, dried beans, eggs, milk, and many fresh fruits and vegetables. Petrol and diesel are zero-rated too (they carry fuel levies instead). Because these are still taxable supplies, the seller can claim input tax on related costs.
- Exempt — outside the VAT system. Examples include many financial services (such as interest on loans), residential rent, and public road and rail passenger transport. The seller doesn’t charge VAT and generally can’t claim input tax on costs linked to these supplies.
The lists are detailed and have exceptions, so check how your specific products or services are treated.
Tax invoices and returns
To claim input tax, a vendor generally needs a valid tax invoice from the supplier. SARS sets out what a tax invoice must contain — our guide on how to write an invoice in South Africa covers the essentials, and the free invoice generator produces one.
Vendors submit a VAT201 return for each tax period. Many small and medium businesses file every two months; larger businesses file monthly. SARS assigns the period when you register.
The rate over time
VAT replaced general sales tax on 30 September 1991 at 10%. It rose to 14% in 1993 and to 15% on 1 April 2018. A further increase proposed in the 2025 Budget was withdrawn before it took effect. Rate changes are announced in the national budget, which is why the VAT calculator lets you change the rate rather than hard-coding it.
What this means for your prices
- If you’re a vendor, the VAT you collect isn’t income. Work out costs, margins and profit on VAT-exclusive figures — the margin calculator and pricing calculator help.
- If you’re not registered, VAT on your purchases is part of your costs. Include it when you work out your prices.
- Either way, keep VAT money separate from operating cash. It’s easy to spend money that belongs to SARS.
Ready to do the sums by hand? See how to calculate VAT manually.
This guide is general information, not tax advice. Tax rates and rules can change. Verify current requirements with SARS or a qualified tax professional.