VAT Registration in South Africa

VAT is short for Value-Added-Tax. SARS describes VAT as an indirect form of tax that is added to the price of consumable goods or services. This tax is usually added to every step of the production and trade process. Currently, the VAT in South Africa is generally 15% for most goods and services.

When a company adds 15% VAT to a product’s cost, this implies the product costs is 115% rather than 100%. The additional 15% is a form of tax that goes to SARS. With cross-border-trade, Customs may also be involved.

You can refer to this helpful VAT Legal Counsel Guide from SARS for extensive details on VAT in South Africa for Vendors (Businesses who are eligible for mandatory Tax Registration).

Here’s a general example.

When you buy a burger at a well-known South African restaurant, it’s pretty likely you’re paying 115% of the cost rather than 100%. The restaurant pays the additional 15% to SARS. The restaurant can also claim back the VAT they’ve paid on most of their business expenses.

If the amount a business owes SARS is less than the amount paid in VAT, SARS will pay you the difference.

Unfortunately, you as a South African consumer, cannot claim back VAT on goods and services in South Africa. There is an exemption that applies when you’re a tourist. Companies who aren’t registered for VAT, cannot claim back VAT either.

It’s also important to note that not all items or service have value-added-tax. Some things are exempt in South Africa and some things are taxed at 0%. Take a look at our “Do all goods and services have VAT in South Africa?” section.

Here’s another example of how VAT works (with a pricing example).

A VAT-registered company, called Buono Gelato, sells one of their ice creams for R10. R10 is 100% of the price. However, Buono Gelato is registered for VAT which means they need to add 15% VAT on top of the R10 cost to its clients.

That means the ice cream now costs R11.50 (or 115% of the original price) to any client. The additional R1.5 (or 15%) does not belong to the company; it’s a tax that’s owed to SARS.

On the flip side, when Buono Gelato uses any services or buys any goods, like ice cream cones, from VAT-registered companies, Buono Gelato can claim back the VAT paid from SARS.  This means on an R1.15 cone, Buono Gelato, can claim back 15 cents (or the 15% paid additionally to the 100%). In fact, Buono Gelato can claim back the additional 15% paid on most of its business expenses from SARS.

Wondering whether VAT registration is good or bad for your business’s long-term growth? Here are the 3 benefits to VAT registration.

The most significant benefit to voluntary VAT registration is your eligibility for growth opportunities. Contracts, RFQs and Tenders often request a VAT number.

Numerous Service Provider Listings also require VAT numbers. It may also simplify your invoicing, as many companies request VAT invoices or quotations.

If you’re registered for VAT you can reclaim the VAT you’ve paid on any service or good that’s a business expense. These exclude anything that’s used for entertainment purposes like club memberships (even if it’s used for your business).

Although it’s not often, sometimes you pay more VAT in business expenses than you owe to SARS in terms of the VAT you’ve added to product/service, SARS owes you a refund.

Naturally, you cannot claim the VAT back on any VAT exemption or 0% VAT items, because essentially you did not pay any VAT on these items.

For this process, you need to submit a refund return to SARS. SARS has to pay you within 21 days starting from the day that you submit your full refund return.

There are some fantastic examples on VAT, and how it work, in SARS’ website.

If you pay your due VAT late, there’s a 10% penalty on the outstanding tax. Interest is also added to the amount you owe every month after you don’t pay your past tax period’s due payments.

There are also other administrative and non-compliance penalties which essentially ensure that businesses don’t overstate how much VAT they pay or understate how much they collect. You can read more about these VAT penalties here.

VAT registration at SARS can take between 10 days up to 2 months, depending on whether you already have a trading CIPC-registered company and how long SARS’s processing takes.

The South African revenue department (SARS) is responsible for VAT (Value-added Tax) administration. When you work directly with the SARS department, VAT registration usually takes a month. If you do not have a trading company yet, VAT Registration may take up to 2 months, because the regulation requires that you have a trading business before you can register for VAT.

Here are 3 other ways we cut the standard VAT registration waiting times in South Africa in half:

• No queues & no confusing paperwork: This means you don’t have to queue at SARS or figure out complex VAT paperwork.
• Specialist administration: Our specialists have worked with the SARS Department for over 14 years; they know exactly what to do to ensure you get your VAT as soon as possible without delays.
• 100% Online: We’ve also developed a sophisticated online system that allows you to order and get your VAT Registration. Our system keeps you updated on the entire process by email and SMS.

Here are our Tax Practitioners who ensure your VAT services are processed as soon as possible.

If you’d like to order one of these services, Signup for a Free Consultation with our VAT Specialist now.

A (1) trading CIPC-registered company/organisation with (2) a bank account, (3) invoices or purchase orders to showcase you are trading and (4) proof of a South African address (5) SARS Registered Representative updated at SARS (we can assist).

* We can assist you even if you do not have a trading CIPC-registered company yet.

No, certain items are taxed at 0% VAT, others are VAT exempt and then there’s also deemed supplies.

The most significant difference between VAT exempt and 0% VAT is your eligibility to register or claim VAT. VAT exemption means you cannot register or claim VAT back at all.

Deemed supplies can be quite complex to understand, but in short, there are exchanges where you do pay an output tax even if you haven’t sold or bought anything.

Here’s a list of VAT exempt items in South Africa in 2020:

These items aren’t submitted for VAT purposes and it disallows VAT registration. There are often other forms of tax added to these services.

• Service-related to insurance, finance and credit
• Education and training services
• Charity fundraising events
• The subscriptions of membership organisations
• When you sell, rent or lease commercial properties or buildings (this can be waived)

Here’s the latest list, full-on VAT exempt items in South Africa for 2020:

Exports, international transport services, goods that are subject to petrol or diesel levies and foods that are considered a necessity like:

• samp
• maize meal
• brown wheaten meal
• brown bread
• rice
• vegetables
• fruits
• vegetable oil
• mealie rice
• pilchards in tins
• eggs
• milk
• dairy powder blend
• cultured milk
• milk powder
• dried mealies
• lentils
• edible legumes and pulses of leguminous plants
• dried beans

* It’s important to note that various production factors affect how items are classified. For e.g. any ready-made meals cannot be zero-rated, regardless of the ingredients used.

VAT registration is mandatory for any entity who earns more than R1 million over the course of 12 consecutive months. Any entity that’s required to register for VAT is referred to as a Vendor by SARS. Vendors can be individuals, trust funds, partnerships, businesses, organisations, foreign donor funds or municipalities.

You must register for VAT within 21 days of exceeding R1 million.

Your business is eligible for voluntary VAT registration when you exceed R50 000 over the same period of 12 months. Microbusinesses registered for Turnover Tax can also voluntarily register if they meet all the requirements.

If you’re unsure if you meet the requirements for voluntary registration, give our VAT specialists a call on our 100% toll-free number.

You can either register at your local SARS branch or via eFiling by completing a VAT 101 – Application for Registration form.

However, a simpler alternative would be to book a free consultation call with one of our VAT specialists. Your dedicated specialist will walk you through the registration process step-by-step.

The usual period is 2 months, however, if you earn more than R30 000 over 2 months, you’ll have to submit your VAT Returns monthly.

There are a few particulars that differentiate a normal invoice from a Tax invoice, Here’s a quick guide of what you need to have on your invoice in order to classify it as Tax Invoice.

• The use of the term “Tax Invoice”
• Your details, the supplier, in full: your business name, your business address and your VAT number.
• The full details of your client (their name, address and VAT number)
• An Invoice Number that’s unique and serialized in a way that logically makes your varying invoices identifiable (according to the date issued for e.g.)
• A full description of your product or services offered
• The exact quantity of the products you’re offering or for example the exact hours you’re invoicing for.
• The individual cost of each product/hour
• The total cost of all the products/hours
• The value of the VAT you’ve added
• Your price before you’ve added the VAT
• Your final price after you’ve added the VAT

There are two main types of VAT registration that businesses and indivduals in South Africa need to be aware of:

• Standard-rated Value Added Tax (15%): This applies to the majority of goods and services. It’s the most common VAT rate businesses must consider for compliance.
• Zero-rated VAT (0%): Certain essential goods and services, like basic food items (e.g. brown bread, vegetable oil, Milk, Eggs, Lentils and more) and some medical services, qualify for this VAT rate, which means no VAT is charged.
• Exempted from VAT (0%): Certain goos ands services are completely exempted from Value Added Tax. Meaning that no VAT may be charged on these services or goods. Examples include Residential rental acoomodation, public transport and educational services offered by accredited educational institutions (like a University).

No, you cannot reclaim VAT if your business or company is not registered for Value Added Tax. Attempting to reclaim VAT which wasnt incurred legally is a criminal offence.

SARS provides a handy tool which allows you to determine if a business is registered for VAT.

Click here for the SARS VAT Tool

CIPC VAT registration is not possible. VAT registration needs to be completed with the South African Revenue Service.

You must register for VAT if you operate a business (even under your own personal name) in South Africa and provides goods or services for payment.

Thus, a person can register for VAT.

VAT registration is compulsory in these cases:

• If your taxable income in any 12-month period exceeds R1 million or is expected to exceed this amount.
• If you have a written contract confirming your taxable income will surpass R1 million in a 12-month period.

Company Partners can assist you with this process to ensure it’s quick and hassle-free!

Yes. Small businesses that are VAT-registered must charge VAT on their goods or services and pay this to SARS.

However, businesses earning below the R1 million threshold are not required to register or pay VAT unless they choose to do so voluntarily.

Meaning they will only pay VAT on purchases they make. You can read if VAT is worthwhile for a small business here.

To obtain a VAT number, you need to apply with SARS (South African Revenue Service) And follow the 7 steps.

Company Partners can assist with the application process, ensuring all required documents are submitted correctly for a hassle-free experience.

Any business or sole proprietor (person trading under their own name) earning more than R1 million in taxable supplies within a 12-month period is required to register for VAT in South Africa.

Additionally, voluntary VAT registration is available if their taxable income is less than R1 million but has gone over R50,000 in the last 12 months under certain conditions.

As a private individual who doesnt run a business as a sole prioritor you cannot register for VAT. A company which meets the voluntary or mandatory requirements for VAT registration can claim the VAT on the vehicle purchase granted the purchase is aligned with the Company (e.g. a delivery vehicle).

No. You need to be able to prove a source of income or a valid contract which proves you will meet the VAT Registration requirements. The VAT Shelf Company includes a VAT Registration service together with the Shelf Company.

If it is for personal reasons such as your primary home then no, you cannot register for VAT to reclaim the VAT portion.

As stated above, a company which meets the voluntary or mandatory requirements for VAT registration can claim the VAT on the property purchase granted the purchase is aligned with the Company.

You will need to meet the VAT Registration requirements first before you can claim the VAT on an equipment purchase.

Yes, the government has reversed the decision to increase the VAT Rate to 15.5% on the 1st of May 2025.

You can learn more about what your business needs to know about the VAT Increase 2025.

Yes you can backdate your VAT Registration subject to SARS approval. This normally happens when SARS determines you should have registered earlier in terms of your VAT liability.