The same price can be written two ways. VAT-exclusive is the amount before VAT; VAT-inclusive is what the customer actually pays. At South Africa’s 15% rate:
| Excl. VAT | VAT (15%) | Incl. VAT | |
|---|---|---|---|
| A service | R2,400.00 | R360.00 | R2,760.00 |
Both describe the same deal. Problems start when it isn’t clear which one a number is.
Convert either way with the free South Africa VAT calculator. Not sure which your figure is? Its “both directions” table shows the result each way.
Selling to consumers: show the inclusive price
Consumers compare the price on the shelf, menu or website with what they’ll pay at the till. In South Africa, section 65 of the VAT Act requires prices advertised or quoted by a VAT vendor to include VAT. Under the Consumer Protection Act, shoppers generally don’t have to pay more than the displayed price. A shelf label showing R299 “plus VAT” is likely to cause a dispute at the till.
Selling to businesses: itemise, and label every figure
Business customers that are VAT vendors usually care about the exclusive amount, because they claim the VAT back. That’s why B2B quotes and invoices normally show three figures: subtotal excl. VAT, VAT and total incl. VAT.
The risk is a bare number. If a VAT vendor quotes “R10,000” and means excluding VAT, the client can reasonably read it as the full price. The vendor then has to account for VAT out of that amount:
- Expected: R10,000 + R1,500 VAT = R11,500
- Actually received if the client pays R10,000: R8,695.65 net + R1,304.35 VAT
That’s R1,304.35 less than intended. Always label quotes “excl. VAT” or “incl. VAT”, and show the total. The free quote generator does this automatically.
Not VAT registered? Your price is the price
If you aren’t a registered vendor, you don’t charge VAT. Don’t add it, and don’t write “excl. VAT” or “VAT not included”. Just quote your price. You can say “Not VAT registered” so business clients know there’s no VAT to claim.
Comparing supplier quotes fairly
Which figure you compare depends on your VAT status:
- You’re a VAT vendor: compare exclusive amounts. A vendor quoting R1,150 incl. VAT costs you R1,000 after you claim the input tax. A non-vendor quoting R1,100 costs you R1,100, because there’s no VAT to claim. The R1,150 quote is cheaper for you.
- You’re not registered: compare inclusive amounts. VAT is a real cost, so the R1,100 quote is cheaper.
Setting retail price points
Customers see inclusive prices, so set those first, then check what you actually keep:
- Start with the net amount you need, for example R260 to cover cost and margin. The pricing calculator can help.
- Add VAT: R260 × 1.15 = R299.00 — a tidy price point.
- If you round to a price point, work backwards to find the real net. Say you need R303 net: × 1.15 = R348.45, which you round to R349. The net is then R349 ÷ 1.15 = R303.48, with VAT of R45.52.
Always calculate margin on the exclusive amount, because the VAT goes to SARS. The margin calculator and markup calculator work on exclusive figures.
Discounts on inclusive prices
VAT is charged on the price actually paid, so a discount reduces VAT in proportion. A R1,150 (incl. VAT) item at 10% off sells for R1,035: R900 net plus R135 VAT. If you advertise discounts, apply them to the inclusive price customers see. The discount calculator handles the percentages.
Quick checklist
- Consumer-facing prices: VAT-inclusive.
- Quotes and invoices: label each figure and show the inclusive total.
- Not registered: no VAT, no “excl. VAT”.
- Compare supplier quotes on the basis that matches your VAT status.
- Calculate margins on exclusive figures.
To learn the formulas themselves, see how to calculate VAT manually, or start with how VAT works in South Africa.
This guide is general information, not tax or legal advice. Tax rates and rules can change. Verify current requirements with SARS or a qualified tax professional.