Frequently Asked Questions about Value Added Tax (VAT) in South Africa

What is VAT in South Africa?

VAT, abbreviated as the Value Added Tax, is an indirect tax added when the end consumer purchases goods or services.

What is the current VAT rate in South Africa?

VAT is currently set at 15% for taxable goods and services. But some supplies are charged at 0% and some are fully exempt.

When was VAT changed to 15% in South Africa?

In the 2018 budget speech, the Minister of Finance announced that the VAT rate would increase from 14% to 15%, effective from 1 April 2018.

Who should pay VAT in South Africa?

The Value Added tax is intended to be paid by the end consumer or purchaser in South Africa.

Who should register as vendors for VAT?

Any business that makes more than R1 million from sales or services in a year, or if it expects to reach that amount should register for VAT. Business that have earned more than R50,000 in the past year can voluntarily register for VAT.

What is the VAT code in South Africa?

In South Africa, your VAT code is a unique 10-digit number that you obtain by registering for VAT with the government. This number typically starts with a 4, for example: 4999999999.

How to calculate VAT inclusive in South Africa?

To find out the final amount inclusive of VAT on a given amount, simply multiply the cost by 0.15, which represents the 15% VAT rate.

Example, if the cost is R100, the VAT would come to R15 (100 * 0.15 = 15).

Which is, VAT Amount = Value × 0.15

For example, if the value is R100, then: VAT Amount = R100 × 0.15 = R15

What items are charged VAT in South Africa?

VAT mainly applies to domestic consumption of goods and services as well as imported goods. However, direct exports are charged at 0% and indirect exports are charged at 15%.

What is VAT-free in South Africa?

The following are exempt from VAT:

• Financial services that are not fee-based

• Educational services offered by a government approved institution

• Residential rental properties

• Public transportation by road and rail

What are zero-rated VAT items in South Africa?

* Export of goods and services sold to other countries.

* Essential food items including 19 essential food products.

* Fuel used for lighting purposes.

* Petrol and diesel are subject to a fuel levy.

* Transportation services across borders.

* Any resources used in agricultural production.

* Sales of businesses that are ongoing and operational.

* Some government grants

What is the VAT period in South Africa?

There are five different categories of tax periods available in South Africa, namely A, B, C, D and E.

Should foreigners pay VAT for the items purchased in South Africa?

Yes, foreigners should pay VAT for the items purchased in South Africa. However, if certain qualifications are met, they can reclaim the VAT paid.

Can foreigners reclaim VAT and what are the qualifications to reclaim VAT?

Yes, foreigners can reclaim VAT if the total value of the purchase exceeds R250. To apply for a VAT refund, foreigners need to submit their request to the VAT Refund Administrator's (VRA) offices. These offices are located at Johannesburg, King Shaka, and Cape Town International Airports, as well as at many land border posts and designated commercial harbors. The refund will be made by cheque payable anywhere in the world, except South Africa.

When to pay VAT in South Africa?

Vendors must send in their VAT returns by the 25th of the month after their tax period ends. They also need to either pay or ask for a refund by the same date. If the 25th is on a weekend or holiday, the deadline moves to the next business day. This rule also applies to eFiling users.

What is the penalty for not paying VAT in South Africa? 

A penalty of 10% is charged on the outstanding VAT amount.