VAT in South Africa: What small businesses need to know

Published Thursday 23 July 2026

Table of contents

• What is VAT in South Africa?
• What is the VAT rate in South Africa?
• Who must register for VAT in South Africa?
• How do I calculate VAT in South Africa?
• When are VAT returns due and how do payments work?
• Simplify South African VAT with Xero
• FAQs on VAT in South Africa

Key takeaways

• VAT in South Africa is a consumption tax that you collect on taxable sales and can reclaim on eligible business purchases.
• The standard VAT rate is 15%, with some goods and services treated as zero-rated or exempt.
• You must register for VAT when your taxable turnover exceeds R2.3 million in any 12-month period; you can choose to register once it reaches R120,000.
• You calculate VAT by comparing VAT you charge on sales with VAT you pay on purchases, then file and pay on your assigned cycle via SARS eFiling.

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. It's collected by registered vendors on behalf of the South African Revenue Service (SARS) at each stage of the supply chain.

When you sell taxable goods or services, you charge VAT to your customers (output VAT). When you purchase goods or services for your business, you pay VAT to your suppliers (input VAT). The difference between what you collect and what you pay forms your VAT liability or refund.

VAT applies to most goods and services. Some supplies are zero-rated, meaning VAT is charged at 0% and you can still claim input VAT on related costs. Examples include exports as well as basic food items like brown bread, maize meal, and dried beans.

Other supplies are exempt, which means you do not charge VAT and you do not claim input VAT. These include financial services, residential rental, and educational services.

There are also special VAT rules for certain transactions. For instance, the domestic reverse charge applies to valuable metals like gold and platinum. Under this mechanism, the recipient (not the supplier) accounts for VAT, reducing the risk of fraud in high-value transactions. Understanding these distinctions helps you charge the correct rate and claim input VAT where allowed.

What is the VAT rate in South Africa?

The standard VAT rate in South Africa is 15%. This rate applies to most goods and services unless they are specifically zero-rated or exempt. The 15% rate has been in effect since April 2018, when it increased from 14%.

Recent discussions to raise the rate to 15.5% from May 2025 and 16% from April 2026 were reversed, so the rate remains unchanged as confirmed by SARS.

Zero-rated supplies

Zero-rated supplies are taxed at 0%, which means you don't charge VAT to your customers, but you can still claim input VAT on the costs you incur to make those supplies. Common zero-rated items include:

• Basic food items: brown bread, maize meal, samp, mealie rice, dried mealies, dried beans, lentils, pilchards, sardines, milk powder, dairy powder blend, rice, vegetables, fruit, vegetable oil, milk, cultured milk, brown wheaten meal, and eggs
• Exports: goods exported outside South Africa
• International transport services: certain passenger and goods transport services
• Fuel levy goods: petrol and diesel (subject to specific conditions)
• Educational textbooks and materials: prescribed educational materials
• Certain agricultural inputs: farming supplies such as fertilizer, pesticides, and seeds

Exempt supplies

Exempt supplies are not subject to VAT, and you cannot claim input VAT on costs related to making those supplies. Examples include:

• Financial services: interest, fees for granting credit, and certain insurance premiums
• Residential rental: long-term rental of residential accommodation (short-term holiday rentals are taxable)
• Educational services: fees for educational instruction at approved institutions
• Public transport: certain passenger transport services
• Childcare services: services provided by registered childcare facilities

Understanding whether your supplies are standard-rated, zero-rated, or exempt determines how much VAT you charge and whether you can claim input VAT..

Who must register for VAT in South Africa?

VAT registration in South Africa depends on your taxable turnover: the total value of taxable supplies (standard-rated and zero-rated) you make in a 12-month period. There are 2 main thresholds: compulsory registration and voluntary registration.

Compulsory registration

You must register for VAT if your taxable turnover has exceeded R2.3 million in any consecutive 12-month period, or if you expect it to exceed R2.3 million in the next 12 months. Once you meet this threshold, you have 21 business days to apply for VAT registration with SARS. Failing to register on time can result in penalties and interest on unpaid VAT.

Compulsory registration ensures that businesses making significant taxable supplies contribute to the VAT system and can claim input VAT on their business expenses.

Voluntary registration

If your taxable turnover is at least R120,000 in the past 12 months (or you expect it to reach R120,000 in the next 12 months), you can choose to register for VAT voluntarily. Voluntary registration can be beneficial if you incur significant VAT on business purchases, as you'll be able to claim input VAT and improve your cash flow. However, once registered, you must charge VAT on all taxable supplies and comply with SARS filing and record-keeping requirements.

Voluntary registration makes sense for businesses with high input VAT costs relative to output VAT, such as startups investing in equipment or inventory. It also signals professionalism and credibility to larger clients who may prefer dealing with VAT-registered suppliers.

How to cancel your VAT registration

VAT deregistration is the process of cancelling your VAT vendor status with SARS. You can apply to deregister if your taxable turnover has dropped below R2.3 million and you don't expect it to exceed that threshold in the next 12 months, or if your business has ceased trading.

You can apply for deregistration via SARS eFiling or at your nearest SARS branch. Submit the VAT123 form (Cancellation of Registration) along with supporting documents showing your reduced turnover or cessation of trade.

Before you deregister, note the following:

• Effective date: SARS determines the deregistration date; it's typically the last day of the VAT period in which you apply.
• Final VAT return: You must submit a final VAT201 return covering all transactions up to the deregistration date.
• Output VAT on remaining assets: When you deregister, SARS treats any business assets as if they've been sold at market value, creating a once-off VAT liability payable in your final return. This includes equipment, vehicles, and stock, this can be substantial. Get advice before deregistering.
• Record retention: Continue to keep all VAT records for 5 years after deregistration, as SARS can still audit prior periods.

How to register with SARS

Registering for VAT involves a few straightforward steps:

1. Gather your details. Collect your business information, including your registered business name, trading name, physical and postal addresses, bank account details, identity documents for directors or owners, and supporting financial records showing your taxable turnover.
2. Choose your channel. You can apply online via SARS eFiling (the fastest and most convenient method) or book an appointment at your nearest SARS branch. SARS eFiling allows you to submit your application, upload supporting documents, and track progress online.
3. Complete the application. Submit form VAT101 (Application for Registration as a VAT Vendor) along with all required supporting documents. These typically include proof of identity, proof of business address, bank statements, and financial records demonstrating your taxable turnover. SARS may request additional documentation to verify your application.
4. Receive your VAT number. Once approved, SARS will issue a VAT vendor number. You must display this number on all tax invoices and correspondence with SARS. Your VAT registration takes effect from a specific date (usually the first day of the month following approval or the date you exceeded the threshold), and you must start charging VAT on taxable supplies from that date.

How do I calculate VAT in South Africa?

Calculating VAT in South Africa involves determining the difference between output VAT (VAT you charge on sales) and input VAT (VAT you pay on business purchases). The result is either VAT payable to SARS or a VAT refund due to you.

Here are the steps involved:

1. Calculate output VAT

If your prices are VAT-exclusive, multiply the net amount by 15% (or 0.15) to find the VAT. If your prices are VAT-inclusive, divide the total by 1.15 to find the net amount, then multiply the net amount by 0.15 to extract the VAT.

Example (VAT-exclusive):Sale amount: R1,000 Output VAT: R1,000 × 0.15 = R150 Total invoice: R1,150

Example (VAT-inclusive):Total invoice: R1,150 Net amount: R1,150 ÷ 1.15 = R1,000 Output VAT: R1,000 × 0.15 = R150

2. Calculate input VAT

To claim input VAT, you must hold a valid tax invoice from a VAT-registered supplier. Add up the VAT amounts shown on all valid tax invoices for purchases used to make taxable or zero-rated supplies. Claim input VAT only on business-related costs that are not exempt supplies.

3. Work out the result

Subtract your total input VAT from your total output VAT. If output VAT exceeds input VAT, you owe SARS the difference. If input VAT exceeds output VAT, you can claim a refund (subject to SARS verification).

Example:Output VAT: R10,000 Input VAT: R6,000 VAT payable: R10,000 – R6,000 = R4,000

Example (refund scenario):Output VAT: R5,000 Input VAT: R8,000 VAT refundable: R5,000 – R8,000 = –R3,000 (refund of R3,000)

Valid VAT invoice checklist

To claim input VAT, your tax invoice must meet SARS requirements. A compliant tax invoice includes:

• Supplier details: full name, address, and VAT registration number
• Invoice number: unique sequential invoice number
• Invoice date: date of issue
• Recipient details: customer name and address
• Description: clear description of goods or services supplied
• Quantity or volume: quantity of items or extent of services
• Price breakdown: price excluding VAT, VAT rate applied (15% or 0%), VAT amount, and total price including VAT

For invoices under R5,000, SARS allows a simplified tax invoice (also called a till slip) showing the supplier's name, VAT number, date, description, and VAT-inclusive total. For invoices over R5,000, the full tax invoice requirements apply.

Use Xero’s invoice template to make sure you tick every box.

Record-keeping requirements

SARS requires VAT vendors to keep all records relevant to their VAT returns for at least 5 years – this applies to both paper and digital documents.

The records you need to keep include:

• Tax invoices: all invoices issued and received, including simplified tax invoices for amounts under R5,000
• Bank statements: statements showing VAT payments made to SARS and receipts from customers
• Import and export documents: customs declarations and proof of export for zero-rated supplies
• Contracts and agreements: any agreements that affect the VAT treatment of a supply
• Accounting records: general ledger, VAT account, and any workings used to complete your VAT201 return

SARS can request these records during an audit or refund verification. Keeping them organised by VAT period makes it easier to respond quickly and supports faster refund processing.

When are VAT returns due and how do payments work?

SARS assigns each VAT vendor a filing frequency based on your taxable turnover and business type. Most vendors file every 2 months (bi-monthly), while businesses with turnover above R30 million file monthly. Special categories apply to farming businesses and certain micro businesses.

Filing your VAT return

Submit your VAT return via SARS eFiling by the deadline shown on your eFiling profile. For eFiling users, returns are due by the last business day of the month following your VAT period, whether you file monthly or bi-monthly. Manual filers must submit by the 25th.

Your VAT return (form VAT201) requires you to declare:

• total output VAT (VAT charged on sales)
• total input VAT (VAT paid on purchases)
• adjustments (if any, such as bad debts or corrections)
• net VAT payable or refundable

Ensure all figures are accurate and supported by your accounting records and tax invoices. SARS cross-references your return against your bank statements, supplier declarations, and prior returns, so discrepancies can trigger queries or audits.

VAT filing frequency

SARS assigns your VAT filing cycle based on your taxable turnover and business type. There are 4 filing cycles, and you can confirm which applies to you by checking your SARS eFiling profile.

• Monthly: for businesses with taxable turnover above R30 million during any rolling 12-month period
• Bi-monthly (every 2 months): for most SMEs, SARS assigns you to either Category A (periods ending January, March, May, July, September, November) or Category B (periods ending February, April, June, August, October, December)
• 6-monthly: for farming businesses with turnover below R1.5 million, or registered micro businesses
• 12-monthly: for certain companies or trusts letting fixed property or managing connected companies

If your turnover changes significantly, contact SARS to review your assigned cycle. Filing in the wrong cycle can result in late submission penalties even if your return is otherwise accurate.

Payment deadlines and methods

If your return shows VAT payable, you must pay SARS using one of the approved payment methods:

• Electronic Funds Transfer (EFT) via your bank
• eFiling payment using a credit or debit card
• Direct debit from your bank account (if arranged with SARS)

If you can’t pay in full, contact SARS before the due date to arrange a payment plan.

VAT refunds

If your input VAT exceeds your output VAT, you can claim a refund. SARS verifies refund claims to prevent fraud, so expect additional scrutiny. Common reasons for refunds include:

• High capital expenditure (purchasing equipment or vehicles)
• Significant zero-rated sales (such as exports)
• Seasonal businesses with fluctuating cash flow

SARS may request supporting documentation, such as tax invoices, bank statements, and proof of export. Keep detailed records ready to speed up the verification process. Once verified, SARS pays the refund directly into your registered bank account, typically within 21 business days.

Simplify South African VAT with Xero

Tracking VAT on your sales and purchases is easier when your accounting records stay organised in one place. Xero accounting software helps you record VAT on invoices, prepare VAT reports, and keep the information you need for SARS. Sign up to get one month free.

FAQs on VAT in South Africa

Here are answers to common questions about VAT in South Africa to help you understand rates, registration, filing, and compliance requirements.

When did VAT become 15% in South Africa?

The VAT rate increased from 14% to 15% on 1 April 2018, as announced in the February 2018 Budget Speech. Since then, the rate has remained at 15%.

Can tourists claim VAT refunds in South Africa?

Yes, foreign tourists can claim a VAT refund on qualifying goods bought in South Africa and taken out of the country within 90 days. You apply at the VAT refund desk when you depart, using your original tax invoices, passport, and travel documents.

How often do I pay VAT in South Africa?

You pay VAT on the same cycle as your VAT returns, which may be monthly, every 2 months, every 6 months, or every 12 months depending on your business type and turnover. You can see your due dates in your SARS eFiling profile.

How much must you earn to pay VAT in South Africa?

You must register for VAT once your taxable turnover exceeds R2.3 million in any 12-month period. You can choose to register once your turnover reaches at least R120,000.

What happens if I don't register for VAT on time?

If your taxable turnover exceeds R2.3 million and you don't register within 21 business days, SARS can impose a penalty of 10% of the VAT you should have collected, plus interest on the outstanding amount. If you've missed the deadline, register as soon as possible via SARS eFiling and declare all VAT that should have been collected from the date you became liable.