Value-Added Tax (VAT)

02/19/2025

The VAT system comprises of three types of supplies:

  • Standard-rated supplies – supplies of goods and services subject to the VAT rate in force at the time of supply. With effect 1 April 2018 the VAT rate was increased from 14% to 15%
  • Exempt supplies – supplies of certain services not subject to VAT. Vendors making exempt supplies are not entitled to input VAT credits
  • Zero-rated supplies – supplies of certain goods or services subject to VAT at zero percent. Vendors making zero-rated supplies are entitled to input VAT credits

Key features

  • Enterprises with a turnover of less than R1 000 000 in any period of 12 months are not obliged to register for VAT
  • Enterprises with a turnover of less than R50 000 in any period of 12 months are not permitted to register for VAT
  • VAT returns are generally submitted on a two monthly basis unless turnover in any period of 12 months exceeds R30 million, in which case returns are submitted monthly
  • Farmers may submit VAT returns on a six monthly basis as long as their turnover does not exceed R1.5 million and property letting companies and trusts may, subject to certain requirements, submit annual VAT returns
  • Vendors may reclaim the VAT element on expenditure incurred for the purpose of making taxable VAT supplies except on, entertainment, excluding qualifying subsistence, passenger vehicles (including hiring) and club subscriptions
  • Input tax credits may not be claimed on expenditure relating to exempt supplies
  • Input tax credits may only be claimed upon receipt of a valid tax invoice
  • In order to be a valid tax invoice the name, address and VAT registration number of the recipient and supplier must appear on tax invoices where the VAT inclusive total exceeds R5 000
  • A deposit is not subject to output VAT until the supplier applies the deposit as consideration for payment

Disclaimer: The information contained in this article is a summary of current legislation and budget proposals proposed by the Minister of Finance on the 19th February 2025. We suggest that you do not act solely on material contained in the booklet as the nature of the information contained herein is general and may in certain circumstances be subject to misinterpretation. In addition, the budget proposals may not include all legislative adjustments which could be made in the near future. Consequently we recommend that our advice be sought when encountering these potentially problematic areas. While every care has been taken in the compilation of the booklet, no responsibility of any nature whatsoever shall be accepted for any inaccuracies, errors or omissions.