VAT Calculator for South Africa and Standard VAT Rate

VAT or Value Added Tax is a replacement for GST, an indirect tax that is levied on the consumption of products and services within a country.

In South Africa, it is administered by SARS or South African Revenue Services, and as of now, the VAT for most goods and services stands at a rate of 15% with no supplementary amount applied.

How to Calculate VAT Using VAT Calculator?

Calculating VAT depending on your country’s standard rate is pretty straightforward. Here is what you need to consider when calculating VAT on any product or service.

• As we know the standard VAT rate is 15% or 0.15, you have to multiply the ex-VAT price of the product by (100 + 15) / 100, which gives us 1.15. For instance, if a TV costs around R100, we multiply this number by 1.15, which would be R86.9565.
• Please note that there are no reduced VAT rates under the South African VAT regime. Hence, you do not have to add the reduced charges to the total price.
• Moreover, no sums are needed for the products in the zero rate category. The price in this case will remain the same with or without the VAT applied.

Calculating the VAT for your business products and services is pretty easy. All you need to do is remember the standard VAT rate on the goods and a few formulas for adding VAT and removing VAT.

In essence, calculating the South Africa inclusive VAT and exclusive VAT on products is pretty straightforward. Simply put, all you need to know is to multiply and divide your product worth by 1.15 to determine the inclusive and exclusive VAT prices, respectively.

Standard VAT Rates

Depending on the country, the suppliers charge a certain amount to the businesses/ vendors on taxable items. The standard VAT rate on most goods and services across South Africa is around 15% with no supplementary rates applied.

Typically, the value-added tax is non-commutative, which means vendors can pay these charges in the previous production and distribution stages. In this case, the vendor is required to pay the differential between the output and input tax on government-authorized items or claim a VAT refund when applicable. There is also news about a VAT increase South Africa in the near future.

Generally, the vendors are entitled to deduct VAT when they are making taxable supplies. Moreover, under a few circumstances, a vendor may claim deductions on services and products by businesses that are not registered for VAT.

• It is also important to note that VAT is charged differently at each stage and it remains proportional to the change in prices (goods and services).

Exempt Products or Services from VAT

In South Africa, there are some products and services on which VAT is not charged. And, on these items, no VAT deductions are allowed, even for associated input costs. In comparison, zero-rated supplies are those that permit suppliers to claim deductions on input VAT while also not incurring the original amount.

Here are some products and services exempted from VAT.

• Educational services are provided by public schools and universities across South Africa.
• Financial services, including debt security, derivatives, currency exchanges, long-term insurance programs, and credit granting.
• Residential accommodation.
• Childcare services, especially those provided by after-school supporting facilities and daycare institutions.
• Transportation services (through road and rail), especially when they are subjected to zero VAT rates.

Zero-Rated Supplies

The South African VAT Act has a list of supplies of services and products that are usually taxed at zero rate. Simply put, in these services and goods, a zero-rate supply by a vendor means a VAT tax but at a 0% rate, meaning you do not have to pay any tax on these items. Moreover, as the zero-rated supplies fall in the category of taxable items, they are subject to input tax deductions.

Here is a list of zero-rated supplies according to the VAT Act in South Africa.

• Basic food items like beans, rice, milk, lentils, maize meal, beans, bread, untreated fruits, and preserved vegetables.
• Sanitary towels and other relevant items.
• International transport services and ancillary transport services.
• Services and products utilized in an export country under a charter agreement.
• Services that are directly linked with movable property in an export country.
• Municipal charges are imposed by the local municipality.
• Goods that are subject to fuel levy like kerosene (illumination), petrol, and diesel.
• Supplies bought from a tax-free shop or inbound duty.
• Welfare organizations offering profitable services are considered to be supplied to a public authority or a local municipality. This is outlined in the VAT Act section 4.5.
• Some insurances are related to international and cross-border transportation services.
• A few services are offered to non-South African residents. It applies to services related to movable goods and fixed property in South Africa. However, this does not include property that was exported later or the supply of movable property of a non-resident who is a registered vendor in the country.
• International roaming services by service providers that are registered with South African Electronic Communications Legislation.
• Enterprise transfers between the concerned party and the vendor.

In essence, the current VAT standard rate in South Africa is 15% on taxable items with some exemptions. Before you register for VAT, it is important to check whether your products and services fall in the category of zero-rated or exempt VAT supplies.