How VAT is worked out
South Africa's standard VAT rate is 15%. A price before VAT is called VAT-exclusive, and a price with VAT added is VAT-inclusive.
- Adding VAT. Multiply the VAT-exclusive amount by 0.15 to get the VAT, then add it on. Multiplying by 1.15 gives the same total in one step.
- Removing VAT. Divide the VAT-inclusive amount by 1.15 to get the price before VAT. The difference is the VAT.
Taking 15% off a VAT-inclusive price gives the wrong answer, because the VAT was worked out on the smaller, pre-VAT amount.
Example: an invoice and a till slip
A freelancer quotes R1 000 before VAT. The VAT is R1 000 × 0.15 = R150, so the client pays R1 150.
A shop receipt shows R2 300 including VAT. The price before VAT is R2 300 ÷ 1.15 = R2 000, so the VAT is R300. Taking 15% off R2 300 would give R345, which is too much.
Common questions
Does everything include 15% VAT?
No. Some goods are zero-rated, which means VAT is charged at 0%. These include certain basic foods such as brown bread and maize meal. Some services, such as most residential rent, are exempt from VAT.
Do I charge VAT on my invoices?
Only if you are registered as a VAT vendor with SARS. If you are not registered, you may not add VAT to your prices.
Why does the VAT on my receipt differ by a few cents?
Shops often work out VAT on each item and round it, while this calculator works it out on the total. The difference is usually a few cents.