VAT Calculator South Africa

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?

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, for the products in the zero rate category, there are no sums needed. The price in this case will remain the same with or without the VAT applied.

VAT Calculation Formula

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 and removing VAT. Here is all you need to know about it.

Standard VAT Rate

Currently, the standard rate of VAT on most goods and services in South Africa is 15% with no supplementary rates applied. However, some items for local and foreign vendors remain exempted from the VAT, which is why it is important to check the list beforehand. Moreover, VAT is subject to change in prices of supplies and its variance remains proportional to the price changes.

Adding VAT

If you have the original price of the product and you would want to derive the inclusive VAT, the formula would be as follows.

Gross Amount = Total Amount / 100 x (100 + VAT Rate)

Total VAT = Gross Amount – Total Amount.

• Price multiplied by 15% VAT is given by (100 + 15) = 115.
• Let’s say a frame was bought at R75. Then, the total amount divided by 100 would be given by R75/ 100 = 0.75.
• Now, the gross amount would be R86.25.
• Next, the VAT would be given as, R86.25 – R75 = R11.25.

Removing VAT

In case you have the VAT-inclusive rate of a product available and would want to determine the exclusive price, the formula for the calculation is given below.

Net Amount = Amount / (100 + VAT Rate) x 100.

• Let’s say you bought a camera at R50 and the VAT applied to the product is 15%. Here is how you can find the VAT-exclusive net amount.
• R50/ (100 + 15) x 100 = R43.47.

Or, you can use an alternate formula.

VAT Exclusive Price = VAT Inclusive Price / (1 + (VAT Rate / 100).

• Let’s say you bought a camera at R50 and the VAT applied to the product is 15%. Here is a simple calculation to find the exclusive VAT amount.
• R50/ (1 + (15/ 100) = R50/ (1 + 0.15) = R50/ 1.15 = R43.47.

What is Inclusive VAT?

Simply put, the inclusive VAT means that the price of a product or service already includes the value of the tax. Most companies have the inclusive VAT displayed on the price of goods and services. Inclusive VAT is significant, as it helps you determine the real effect of the VAT tax on your financial statements and gives you an accurate representation of the revenue generated monthly and annually exclusive of the VAT amount.

In South Africa, the VAT is charged at 15%, which means you would have to find the VAT amount to include in the pre-VAT amount. For this, you just have to multiply it by 0.15% and the answer to this calculation gives you the VAT-inclusive amount. Please note that the VAT-inclusive amount is always more than the VAT-exclusive amount.

Key Elements of VAT Inclusion

• The customer pays a flat rate for the product or goods.
• Calculations of the VAT are done prior to the transaction.
• The unit price is lower before the tax is applied.

How to Calculate Inclusive VAT?

To figure out the inclusive VAT of your company’s bought products and services, you can do these simple calculations. So, dive right in.

The formula for inclusive VAT is Gross = Amount / 100 x (100 + VAT Rate).

Now, let me break it down for you.

• First, decide what the VAT rate is for your calculation. In this case, the current standard VAT rate in South Africa is 15%.
• Now, divide the product’s amount by 100.
• Once done, multiply the obtained amount by (100 + VAT rate). By converting this into a calculation, you will get the amount/ 100 x (100 + 15). The obtained amount is your gross amount including the VAT.
• Now that you have the gross amount, you can also calculate VAT from it through a simple formula, Total VAT = Gross – Price.

Let me demonstrate how to calculate inclusive VAT through a real example. Suppose you are selling a product for R500. Here are some simple calculations to derive the VAT from gross.

• Amount = R500
• VAT Rate = 15%
• As given by the formula, Gross = Amount / 100 x (100 + VAT Rate).
• Now, let’s enter the values in the formula.
• First, by dividing the amount by 100, we will get R500/ 100, which is around 5.
• Next, multiply it by (100 + VAT Rate), which is 5 x (100 + 15), which is around R575.
• Hence, the gross amount or inclusive VAT of this product would be R575.

Now, you can easily obtain the total VAT from the gross amount.

• Total VAT = Gross Amount – Amount.
• Total VAT = R575 – R500.
• The total VAT in this case is R75.

What is Exclusive VAT?

Quote opposite to the inclusive VAT, VAT exclusive is the price of a good or product before VAT is added to it. Usually, the VAT-exclusive prices are useful for situations when prices are aimed at vendors who are striving to recover the charged VAT, for instance, the trade prices for businesses. Exclusive pricing favors business owners who do not want to take the tax into account when selling their products or want a detailed account of capital when creating invoices.

Speaking of the VAT-exclusive calculation, if the amount already has VAT included, you can easily find the excluded amount by dividing the total work by 1 + VAT percentage (15% in the case of South Africa). Please note that VAT-exclusive is always less than the amount inclusive of VAT charges.

Key Elements of VAT Exclusion

• Businesses do not need to consider taxes in their rates.
• Tax is added to the final transaction.
• Tax is isolated on the product sale receipt.

How to Calculate Exclusive VAT?

Like inclusive VAT pricing, it is pretty straightforward for businesses to calculate exclusive VAT pricing. All you need to do is perform some simple calculations for the reverse VAT calculations. Here is how it goes.

Method 1

The formula for exclusive VAT is Net Amount = Amount / (100 + VAT Rate) x 100.

Now, let me break it down for you.

• First, decide what the VAT rate is for the calculation. As for now, the standard VAT rate for most goods and services in South Africa is 15%.
• Now, the amount of your product is to be divided by (100 + VAT rate) = (100 + 15) = 115.
• Once done, you are required to multiply the obtained value by 100.
• The resultant value will give you the net amount of the product that does not include the VAT charges.
• From this net amount, you can also calculate the total VAT using the formula, Total VAT = Total Amount – Net Amount.

Now that we have understood it, let me demonstrate this calculator through a real-life example. Suppose you have bought a product for the gross price of R500. The calculations to derive the net amount would be the following.

• The total amount of the product = R500.
• VAT Rate = 15%.
• As given by the formula, Net Amount = Amount (100 + VAT Rate) x 100.
• First, divide the amount by (100 + 15), which would become R500/ (100 + 15) = R500/ 115 = 4.3478.
• Now, multiply the obtained amount by 100. R4.3478 x 100 = R434.78.
• The net amount of this product is R434.78.

You can also get the total VAT from this amount.

• Total VAT = Amount – Net Amount.
• Total VAT = R500 – R434.78.
• The total VAT would be R65.22 on this product.

Method 2

The second formula to derive the exclusive VAT of a product is VAT Exclusive Price = VAT Inclusive Price / (1 + (VAT Rate / 100).

Now, let me break it down for you.

• First, decide what will be the standard VAT rate. In this case, it would be the standard VAT rate for South Africa, which is 15%.
• Now, divide this VAT rate by 100. 15/ 100 is equal to 0.15.
• Next, add 1 to the obtained answer, which is 1+0.15.
• Finally, you have to divide the VAT-inclusive price of the product by the obtained answer. The resultant amount would be exclusive VAT.

Next, let us understand it through a simple example. You bought a product for a gross amount of R500. Here is how you can derive exclusive VAT.

• Total amount = R500.
• VAT Rate = 15%.
• The formula is VAT Exclusive Price = VAT Inclusive Price / (1 + (VAT Rate / 100).
• First, divide the VAT rate by 100, which is 15/ 100 = 0.15.
• Adding 1 to the obtained value will be 1.15.
• Next, dividing the VAT-inclusive price by 1.15 would be R500/ 1.15 = R434.78.
• The VAT-exclusive price of this product is R434.78.

In essence, calculating the South Africa inclusive 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. I hope this guide has helped everyone get accurate VAT charges on different products.