How to calculate VAT in South Africa
South African VAT is charged at 15% on the price excluding VAT. Two calculations cover almost every situation.
Adding VAT to a price
Use this when you know your price before VAT, for example when quoting or invoicing.
VAT = price excluding VAT × 0.15
Price including VAT = price excluding VAT × 1.15
Example: R2,000 excluding VAT. The VAT is R2,000 × 0.15 = R300, so the total is R2,300.
Removing VAT from a price
Use this when a price already includes VAT, such as a supplier's receipt, and you need the amount before VAT or the VAT you can claim.
Price excluding VAT = price including VAT ÷ 1.15
VAT = price including VAT × 15 ÷ 115
Example: R2,300 including VAT. Excluding VAT, it is R2,300 ÷ 1.15 = R2,000, and the VAT is R300.
The most common VAT mistake
Taking 15% off a VAT-inclusive price does not give you the price excluding VAT. On R2,300, 15% is R345, which would leave R1,955. The correct answer is R2,000, because the VAT was added to R2,000, not to R2,300. Inside an inclusive price, VAT is 15/115 of the total, about 13.04%.
When to charge VAT
Only VAT-registered businesses may charge VAT. Registration is compulsory once your taxable supplies pass R2.3 million in a 12-month period, and voluntary from R120,000. Read our guide to VAT registration in South Africa.
If you are registered, show the amount excluding VAT, the VAT and the total on every invoice, and make sure it meets the tax invoice requirements. Our free invoice generator adds 15% VAT for you.