Value-Added Tax

What is new?

• 27 April 2025 – Media release: SARS welcomes court order relating to the VAT rate originally announced to come into effect on 1 May 2025
  The Commissioner for the South African Revenue Service (SARS), Mr Edward Kieswetter, welcomes the agreement between the parties and court order in the matter relating to the 0.5 percentage point increase in value-added tax (VAT) that was originally announced to come into effect on 1 May 2025, along with other matters. Read the full media statement here.
  
  
• 25 April 2025 – Media release: Practical implication on Finance Minister’s decision to reverse VAT
  The Commissioner for the South African Revenue Service (SARS), Mr. Edward Kieswetter has noted the Finance Minister, Mr. Enoch Godongwana’s decision to reverse the planned 0.5% VAT rate increase, which was initially set to take effect on 1 May 2025. This decision has significant practical implications for VAT vendors and consumers. As the administrator of all national government tax measures, SARS will ensure that the necessary adjustments are made to accommodate this change. Read the full media statement here.
  
  
• 24 April 2025 – Rates and Monetary Amounts and the Amendment of Revenue Laws Bill introduced
  The Minister of Finance introduced the Rates and Monetary Amounts and the Amendment of Revenue Laws Bill [B14—2025] (Rates Bill), which proposes to maintain the Value-Added Tax (VAT) rate at 15% from 1 May 2025, instead of the proposed increase to VAT announced in the Budget in March.
  
  
• 12 March 2025 – National budget speech

  VAT is levied at the standard rate of 15% on the supply of goods and services by registered vendors. The rate was to increase to 15.5% from 1 May 2025 and to 16% from 1 April 2026 but this is reversed by clause 13 of the Bill introduced on 24 April 2025. A vendor that makes taxable supplies of more than R1 million per annum must register for VAT. A vendor that makes taxable supplies of more than R50 000, but not more than R1 million per annum, may apply for voluntary registration. Certain supplies are subject to a zero rate, or are exempt from VAT.

• 15 November 2024 – Latest VAT Connect newsletter
  Issue 18 (November 2024) of the VAT Connect newsletter is available.
  
  
• 30 March 2023 – VAT264 form modernised
  The VAT264 form has been modernised to make it easier and simpler for vendors to complete.  It has also been updated to align with the recent VAT amendment contained in the Taxation Laws Amendment Act, 2022. See the new form VAT264 declaration for the supply of second hand goods external form here.
  
  
• 1 July 2022 – VAT Domestic Reverse Charge (DRC) on valuable metal from 1 July 2022
  A VAT Domestic Reverse Charge (DRC) on valuable metal was introduced in the Regulation published in Government Gazette 46512 on 8 June 2022, see Regulations on Domestic Reverse Charge relating to valuable metal, issued in terms of section 74(2) of the Value-Added Tax Act, 1991 (Act 89 of 1991), Notice 2140.  The DRC Regulations came into effect on 1 July 2022. For a comprehensive understanding of these Regulations, see the Explanatory Memorandum and Media Statement. For more information see the VAT Domestic Reverse Charge webpage.

What is VAT?

VAT is an abbreviation for the term Value-Added Tax. It is an indirect tax on the consumption of goods and services in the economy. Revenue is raised for government by requiring certain traders (vendors), that carry on an enterprise to register for VAT.

Subject to certain conditions, the vendor must then charge VAT on supplies of goods and services made by it (output tax). VAT is only charged on taxable supplies made. Taxable supplies are supplies for which VAT is charged at either the standard rate (currently 15%, see change as announced 12 March 2025 or zero rate (0%). There is a limited range of goods and services which are subject to VAT at the zero rate or exempt from VAT.

The vendor will also be entitled to deduct VAT charged to it (input tax) when incurred for making taxable supplies. Under limited circumstances a vendor may claim a deduction (notional input tax) on a supply made to it by a business that is not registered for VAT.

VAT is non-cumulative, meaning that a credit/deduction is allowed for VAT paid in previous stages, within the production and distribution chain. The vendor is required to pay the difference between the output tax and the input tax or claim a VAT refund where the input tax exceeds the output tax.

VAT is therefore, charged at each stage of the production and distribution process and it is proportional to the price charged for the goods and services. VAT is also payable on the importation of goods and on imported services.