Everything you need to know about VAT in South Africa — the R1,000,000 compulsory threshold, 15% rate, SARS registration, and bi-monthly VAT201 returns.
Last updated: June 2026
You must register for VAT in South Africa if your taxable supplies exceed — or are likely to exceed — R1,000,000 in any consecutive 12-month period. This is South Africa's compulsory registration threshold. Unlike some countries, this is a high threshold by international standards — many small businesses and freelancers will not reach it for years.
Taxable supplies include all standard-rated (15%) and zero-rated (0%) supplies. Exempt supplies — such as residential rental accommodation, certain financial services, and educational services — do not count toward the R1,000,000.
Voluntary registration is available once your taxable supplies have exceeded R50,000 in the past 12 months, or if you can demonstrate a reasonable expectation of reaching R50,000. Voluntary registration is worth considering if you sell primarily to other VAT-registered businesses (who can claim back the VAT you charge) or if you have significant input VAT to recover on equipment or business premises.
Foreign suppliers of digital services: If you are a foreign business supplying digital services (streaming, software, apps, e-books, online courses) to South African consumers, you must register for VAT regardless of the R1,000,000 threshold — the moment you make any taxable supply to a South African consumer, you should be registered. The standard 15% rate applies.
South Africa's zero-rated supplies (0% VAT, input tax credits allowed) include: basic foodstuffs (brown bread, maize meal, samp, rice, lentils, dried beans, vegetables, fruit, cooking oil, milk, eggs), exported goods and services, international transport, certain agricultural inputs, and services supplied by a vendor to a non-resident who is outside South Africa when the service is performed.
Go to sars.gov.za and register via SARS eFiling. You'll need your income tax registration number (first get an income tax number if you don't have one), certified copies of identity documents, bank account details, and proof of your business address.
Submit Form VAT101 (Application for Registration as a VAT Vendor). You can do this via eFiling or at a SARS branch. Include your expected taxable turnover, the date you exceeded (or expect to exceed) the registration threshold, your banking details, and details of your business activities.
SARS issues a 10-digit VAT number (your "VAT registration number" or "VAT vendor number") once your application is approved. Processing can take 2–21 working days depending on whether SARS requires additional documentation or site verification. Your effective date of registration will be backdated to when you exceeded the threshold.
All VAT returns (VAT201) must be submitted electronically via SARS eFiling. Payments can be made via eFiling, EFT to SARS's bank accounts, or at selected commercial banks. Make sure your eFiling profile is active and linked to your VAT number before your first return is due.
Bi-monthly VAT201 returns: South African VAT is filed every two months (the "tax period"). There are six tax periods per year, each covering two calendar months. Your return and payment are due by the last business day of the month following each tax period — so Period 1 (January–February) is due by 31 March. Companies filing electronically get an additional 3 business days to pay (SARS eFiling late payment grace).
Tax invoices: You must issue a valid tax invoice for any supply of R50 or more to a VAT-registered customer who requests one. A full tax invoice must include: your VAT registration number, the word "tax invoice" prominently, the date, a sequential invoice number, your name and address, the customer's name, address and VAT number (for supplies over R5,000), a description of the goods/services, quantities, the VAT amount, and the total VAT-inclusive price.
Late registration and penalties: SARS can impose a 10% penalty on the outstanding VAT plus interest at the prescribed rate (currently around 11.25% per annum) for late registration. In severe cases — particularly where SARS considers non-registration to be deliberate evasion — penalties can reach 200% of the VAT due, and criminal prosecution under the Tax Administration Act is possible.
The zero-rated basic food list is specific and sometimes counterintuitive. Zero-rated items include: brown bread, maize meal, samp, mealie rice, dried beans, lentils, pilchards or sardines in cans, milk powder, dairy liquid blend, rice, vegetables, fruit, vegetable oil, and eggs. Processed or prepared versions of these items are often standard-rated at 15%. Chicken is zero-rated but prepared takeaway meals are not.
Yes. If your taxable supplies fall below R1,000,000 and you're a voluntary registrant who has fallen below R50,000, you can apply to deregister. File Form VAT123 with SARS. You must submit a final VAT201 return for the period including your deregistration date. SARS may require you to account for output tax on stock and assets you retain ("deemed supply" on hand at deregistration).
Most businesses account for VAT on the invoice basis — you account for output VAT in the period you issue the invoice, regardless of when the customer pays. Small vendors with taxable supplies under R2.5 million per year can use the payments basis — you only account for VAT when you actually receive (or make) payment. The payments basis is simpler for cash-flow management but requires SARS approval.
Services supplied to a non-resident client who is outside South Africa when the service is physically performed are generally zero-rated (0% VAT). However, services that relate to land or immovable property in South Africa, or services physically performed in South Africa for a person who is in South Africa, remain standard-rated. The rules are complex — confirm with a tax professional for cross-border service arrangements.
A deemed supply arises when you use business assets for private purposes, give goods to employees as non-taxable fringe benefits, or deregister as a VAT vendor while holding stock or assets on which you claimed input tax credits. In these situations, SARS treats the usage or retention as if you had made a taxable sale, and you must account for output VAT on the open market value of the goods or services.
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