South Africa VAT compliance and rates

Businesses in South Africa that must register for value added tax (VAT) are referred to as VAT vendors. Within the South African VAT system, vendors pay VAT on expenses (input tax) and charge VAT on supplies made (output tax). The output tax collected may be reduced by input tax paid, and the net amount is payable to the South African Revenue Service (SARS).

VAT is charged at either the standard rate of 15% or zero rate.

There are detailed rules controlling the recording and processing of South African transactions. These include guidelines on:

• South African invoice requirements
• Foreign currency reporting and translation
• Credit notes and corrections
• What accounting records must be maintained

Businesses with a South African VAT number must submit periodic VAT returns. Returns are monthly for businesses with a turnover greater than ZAR 30 million. For businesses with a turnover of less than ZAR 1.5 million, VAT returns must be submitted every four months. Within the farming sector, returns are submitted every six months (if turnover is also less than ZAR 1.5 million).

Businesses with a turnover between ZAR 1.5 million and ZAR 30 million must submit returns every two months. For all businesses, VAT payments must be settled by the 25th of the month following the period end.

Businesses with an annual turnover exceeding ZAR 1 million have a VAT liability, and must register as VAT vendors and charge output tax. They will be issued with a South African VAT registration number. Businesses that expect to exceed ZAR 1 million within the next 12 months must also register.

Vendors with an annual turnover of under ZAR 1 million but over ZAR 50,000 can choose to register as VAT vendors.

Non-resident suppliers of electronic services are required to register for VAT in South Africa once the value of taxable supplies has exceeded ZAR 1 million in any consecutive 12-month period.

Qualified purchasers can benefit from a VAT refund mechanism in South Africa, to refund VAT paid at a rate of 15% on certain goods. Qualified purchasers include tourists, foreign diplomats and foreign enterprises, and non-residents of South Africa.

Qualified purchasers must submit a claim for their VAT refund at their time of departure from South Africa, or when the relevant goods are exported. The South African VAT refund only applies to goods, and not services.

The standard rate of VAT is 15%. Exports, certain foodstuffs, and other supplies are zero-rated, and certain supplies are exempt (mainly certain financial services, residential accommodation and public transport). Very few business transactions carried out in South Africa are not subject to VAT.

VAT isn’t paid by businesses. It is charged to consumers in the price of goods and collected by businesses, then submitted to SARS. In South Africa, the VAT rate is levied at a standard rate of 15% on the supply of goods and services by registered vendors (businesses). There is a limited range of goods and services subject to VAT that are zero rated or are exempt from VAT.