Value Added Tax (VAT) is a tax all consumers pay on most goods and services – those known as taxable supplies.
VAT is also levied on goods that imported into South Africa.
VAT is levied in line with the Value Added Tax Act. The rate is currently 15 percent, but the 2025 Budget proposes increasing this rate to 15.5 percent from May 2025 and to 16 percent in April 2026.
At the current rate, it means on every R100 good or service, you pay R15 in tax. If a good or service costs R23 including VAT, it means R20 is the price of the good excluding VAT and the VAT is R3.
The VAT rate can be amended by way of an amendment to the VAT Act and usually proposed increases are included in the Taxation Laws Amendment Bill that must be approved by Parliament.
VAT is collected by anyone who is a VAT vendor and must be paid over to the South African Revenue Service (SARS).
If you or your company, partnership or trust are selling goods or services and are what the law defines as an enterprise and your turnover is in excess of R1 million in any 12-month period, you are obliged to register as a VAT vendor and charge VAT on your goods or services.
An enterprise is a person or entity that is continuously or regularly suppling goods or services for payment, but excludes an employee.
If the value of your goods or services for the year is or is expected to be more than R50 000, you or your business can also choose to register for VAT.
The VAT Act categorises enterprises according to their size and this determines the frequency with which the vendor must file a VAT return and pay the VAT over to the South African Revenue Service. It could be monthly, every second month, every six months or annually.
VAT vendors collect VAT on the goods or services they sell.
A VAT vendor may also pay VAT on, for example, supplies bought to sell on or use in creating new goods. This is known as input tax and it can be claimed against the VAT tax collected on goods sold before the tax is paid to SARS.
Some goods and services are exempt from VAT, notably:Rent for residential accommodation but not hotel accommodation as this is regarded as commercial accommodation;
Fees for school, university or other approved educational institutions that are exempt from income tax and boarding or lodging at these institutions;
Life insurance premiums;
Medical scheme contributions;
Contributions to your retirement fund;
Interest charged on loans, credit cards, overdrafts, and so on; and
Taxi, bus and train fares, but airfares do attract VAT.
Some goods and supplies are zero-rated for VAT to support lower-income earners.
This means no VAT is payable on these goods.
Goods used by us as individuals that are currently zero-rated include:
Brown bread,
Maize meal,
Samp,
Beans and lentils,
Pilchards,
Sardines,
Rice,
Vegetables,
Fruit,
Vegetable oil,
Milk,
Cultured milk,
Milk powder,
Eggs,
Wheat flour,
Paraffin,
Petrol;
Diesel;
Sanitary pads; and
Municipal rates.
Some goods used by farmers, such as seeds, fertilisers and plants are also zero-rated.
When property is sold to a new owner it is typically subject to transfer duty unless it is below the transfer duty threshold. But if a developer’s business is building new developments and it is registered for VAT, then the property sale may be subject to VAT instead of transfer duty.
If you buy goods or services from a foreign supplier, you may not be charged VAT, but you may have to pay customs duty.
If the supplier supplies electronic goods such as music or movies worth more than R1 million to South African customers, it must also register for VAT.
This is why you pay VAT on your Spotify and Netflix subscriptions.
If a business is trading below R1 million, it can sell you its goods or services without being registered for VAT.
If you sell something privately, such as your car, you do not need to charge the buyer VAT or pay VAT over to SARS.
If you are a tourist or non-resident of South Africa you can claim the VAT you paid 
back on goods you take home with you. The goods need to be cleared by Customs and Excise officials and you will need the invoice to lodge the claim at the port or airport from which you are leaving the country.
If you do not have the goods on you in your hand luggage, the invoice must be endorsed by the Customs and Excise official and a VAT Refund Administrator.
