Understanding VAT in South Africa (2024 Update)

Learn the step-by-step process for How to Calculate VAT. The standard VAT Rate is 15% that we already set in our VAT Calculator South Africa.

Value-Added Tax (VAT) in South Africa is a key element in the country’s tax system accounting for close to 25 percent of the total tax revenues. The first time it was introduced was by the government in 1991 in the year 1991, VAT replaced General Sales Tax (GST) which was included in prices of products, but was not able to provide clarity and transparency. The first amount was 10 percent and was increased to 14 percent in 1993 before being was raised to 15 percent in April of 2018 which is where it now is.

To assist vendors, consumers and companies calculate VAT efficiently as well as accurately, we provide an special South African VAT Calculator. If you’re trying to include tax, remove VAT or figure out your gross/net price using this tool, it can simplify the process.

What is VAT in South Africa?

VAT is an indirect consume tax which is collected at each step in the chain of supply and at the end of the day, it is to be paid through consumers at the end-user. Businesses are intermediaries that collect the tax for the government via the SARS (South South African Revenue Service).

How to Use the 15% VAT Calculator for South Africa

Step-by-step instructions:

1. Choose your country The calculator will detect the present South African VAT rate (15 15 percent).
2. Input the value that you want to be net (exclusive of VAT) or gross (inclusive).
3. Select the operation you want to use Add VAT or remove VAT.
4. Simply click calculate Instantly get results, including the VAT amount, as well as gross and net totals.

VAT Calculation Formulas for 15% Rate

To Add VAT (Inclusive Price)

Formula:

VAT = (Original Price x 15%) Gross Price = Original Price + VAT

Example:

• Original Price = R30,000
• VAT = (30,000 x 15%) = R4,500
• Total Price = 30,000 + 4,500 = R34,500

To Remove VAT (Exclusive Price)

Formula:

VAT = Gross Price - (Gross Price x (100 / (100 + 15))) Net Price = Gross Price - VAT

Example:

• Gross Price = R30,000
• VAT = 30,000 – (30,000 x (100 / 115)) R3,913
• Net Price = 30,000 – 3,913 = R26,087

VAT Regulations and Economic Impact in South Africa

The South African VAT system was intended not only as an instrument for revenue, but also as an effective fiscal lever that helps stabilize the economy particularly in a country with a wealth of resources that relies on industries like agricultural and mining. VAT is required for all businesses that has more than an annual turnover that exceeds R1 million and applies to all items and services unless it is excluded or zero-rated.

VAT Timeline:

• 1991 – VAT was introduced at 10 percent
• 1993 – Increased to 14%
• 2018 – Raised to 15% (current)

How VAT Works for Businesses in SA

Businesses have to pay and collect taxes in two different forms.

• input VAT VAT: VAT that is charged by companies on the goods and services they purchase. It is tax deductible.
• Output VAT Taxes that is charged to the customer. Businesses pay this tax to SARS.

Net VAT to pay = Output VAT – Input VAT

Who Must Register for VAT in South Africa?

Compulsory Registration:
Every business that has an annual revenue that is at least R1 million over the course of a 12 month period must apply for VAT registration.

Voluntary Registration:
Companies with an annual average turnover in excess of greater than R50,000 could choose to register for the purpose of claiming input VAT, as well as making their business operations more formal.

VAT on Products and Services: What’s Taxed and What’s Not

Standard Rated at 15%:

• Electronics
• Clothing
• Furniture
• Restaurant meals
• Accessories and mobile devices

Zero-Rated Items (0% VAT):

• Essential food items (bread, eggs, maize and other vegetables)
• Pads for sanitation
• Goods subject to the fuel levies
• International transport services
• Exports

Exempt by VAT:

• Residential rent
• Public transport by rail and road
• Education services (accredited)
• Financial services (non-fee based)
• Medical plans and services offered from registered professionals

How to Register for VAT in South Africa (via SARS)

1. Go to this site to access the SARS eFiling site
2. Log in, and then go on to “Organizations” under the main menu.
3. Choose “Register for Tax”
4. Select VAT, fill in your details
5. Send the application

After registration, you’ll receive an VAT number as well as an official notice to confirm your responsibilities.

VAT Refund Policy When You Can Claim Back VAT

If you’ve paid more than taxes in the past or are liable for input taxes which is higher than the output taxes, SARS offers a refund option. Refunds are available for:

• Offset your primary or branch account.
• Relieves outstanding VAT obligations

You should keep current tax invoices and documents supporting them for any refund claim.

Key Benefits of Using the SA VAT Calculator

• Automated calculations save time
• Reduces human error
• The VAT rate is updated to reflect the latest rates.
• Businesses can be more compliant.
• It simplifies the process of both both reverse as well as forward VAT operations

Frequently Asked Questions (FAQs)

Q: What is the formula for calculating the 15% VAT on a cost?
A: Apply: VAT = Price + 0.15  then add the amount to the original for the price gross.

Q : How can I get rid of VAT from a price total?
A: Divide the total divided by 1.15 to get the net (exclusive) value.

Q: Is a small-sized business able to be registered to collect VAT?
A: Yes, companies with a annual turnover of R50,000 or more are able to join on their own initiative.

Q: What happens if I don’t sign up for the required time?
A: Failure to register VAT can cause fines, interest and audits by SARS.

Q: Do you have to pay VAT on rental properties?
A: Rent for residential properties can be exempt However, commercial rental properties can be subject to VAT.

Ready to Calculate VAT in South Africa?

Use our 15% VAT Calculator for South Africa to simplify your tax calculations whether you’re a consumer checking your invoice, a vendor calculating your returns, or a business preparing your VAT submission.