Understanding VAT in South Africa: The 15% Tax on Everything You Buy
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Value-Added Tax (VAT) is a consumption tax levied on most goods and services in South Africa. At 15%, it is built into nearly everything you buy. Unlike income tax, VAT is paid by the end consumer — businesses collect it on behalf of SARS and pass it through.
How VAT Works
When a shop sells you an item for R115, the price includes R100 for the goods and R15 in VAT. The business remits that R15 to SARS (minus any VAT they paid on their own inputs). This "input/output" system means VAT is only truly borne by the final consumer.
The Current Rate: 15%
South Africa's VAT rate has been 15% since 1 April 2018, when it was increased from 14%. A further increase announced in 2025 was reversed, and SARS still lists 15% as the current rate.
Zero-Rated Items
Certain essential goods are zero-rated — VAT is charged at 0% to make them more affordable. These include: brown bread and brown bread flour, maize meal, samp, mealie rice, dried mealies, dried beans, lentils, pilchards in tins, milk, cultured milk, milk powder, dairy powder blend, rice, fresh vegetables and fruit, vegetable cooking oil (not olive oil), hens' eggs, and edible legumes and pulses. The zero rate applies to the plain product, not to prepared meals or mixed packs.
Exempt Supplies
Some services are exempt from VAT entirely (not zero-rated — the difference is the supplier cannot claim input VAT). These include: many financial services (such as interest on loans and life insurance, though fees and commissions are charged VAT), residential rental, public road and rail transport (taxis, buses, trains), education provided by schools, colleges and universities, and crèches and after-school care.
When Must a Business Register for VAT?
Registration is mandatory when taxable turnover exceeds R2.3 million in any 12-month period (raised from R1 million effective 1 April 2026). Voluntary registration is available for businesses with turnover between R120,000 and R2.3 million (up from R50,000–R1 million before 1 April 2026). Registered businesses charge VAT on sales, claim input VAT on purchases, and file returns usually every two months (monthly for the largest vendors, six-monthly for some micro businesses and farmers).
Subject to legislation: The higher VAT thresholds were announced in Budget 2026 for 1 April 2026 and are subject to Parliament’s legislative process. SARS says that, until the legislation is promulgated, it is administering new VAT registrations on the higher thresholds from 1 April 2026. Check SARS for the latest.
Checking if a Business is VAT-Registered
A tax invoice must show the supplier's VAT number, so ask for one on a business purchase. If an invoice has no VAT number, the business may not be registered, and you can check with SARS.