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%. The 14% rate had been in place since 1993. The increase was announced in the 2018 Budget Speech to address the fiscal deficit.
Zero-Rated Items
Certain essential goods are zero-rated — VAT is charged at 0% to make them more affordable. These include: 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, eggs, edible legumes and pulses, and cake flour.
Exempt Supplies
Some services are exempt from VAT entirely (not zero-rated — the difference is the supplier cannot claim input VAT). These include: financial services (banking, insurance), residential rental, public transport (bus, train), educational services provided by schools and universities, and childcare services.
When Must a Business Register for VAT?
Registration is mandatory when taxable turnover exceeds R1 million in any 12-month period. Voluntary registration is available for businesses with turnover between R50,000 and R1 million. Registered businesses charge VAT on sales, claim input VAT on purchases, and file returns bi-monthly (or monthly for large businesses).
Checking if a Business is VAT-Registered
You can verify a VAT registration number on the SARS eFiling platform or by contacting the SARS call centre. A valid VAT number starts with "4" and is 10 digits long. Any VAT invoice must include the supplier's VAT number — if it doesn't, the business may not be registered.