Introduction to VAT in South Africa
Value-Added Tax (VAT) is charged at 15% on most goods and services in South Africa. If your business's taxable turnover exceeds R1 million in any 12-month period, you must register for VAT with SARS. You may also voluntarily register if your turnover exceeds R50,000.
Once registered, you must submit a VAT201 return every one, two, or four months (depending on your VAT period). This return reconciles the VAT you collected from customers (Output VAT) against the VAT you paid to suppliers (Input VAT). The difference is either paid to SARS or refunded to you.
Before You Start: What You Need
- Your SARS eFiling login (efiling.sars.gov.za)
- Your VAT registration number
- Your sales totals for the period (including zero-rated and exempt)
- Your purchase and expense totals for the period
- All valid VAT invoices from suppliers (required to claim input VAT)
Understanding the VAT201 Boxes
Box 1 — Standard-rated supplies (Output VAT)
Enter the total value of all sales and services charged at 15% VAT during the period. This is your VAT-inclusive amount. For example, if you invoiced R115,000 (including VAT), enter R115,000 in Box 1.
Box 2 — Zero-rated supplies
Enter the value of any supplies charged at 0% VAT. In South Africa, zero-rated items include basic foodstuffs (brown bread, maize meal, milk, eggs), exports, and certain agricultural supplies.
Box 3 — Exempt supplies
Exempt supplies are not subject to VAT at all (not even 0%). Examples include residential rental income, financial services, and educational services by approved institutions. Enter the total here.
Box 4 — Total output tax (calculated)
SARS calculates this as 15/115 × Box 1. This is the actual VAT amount you collected from customers.
Box 5 — Standard-rated purchases and expenses (Input VAT)
Enter the VAT-inclusive total of all purchases and expenses on which you paid 15% VAT. You must hold a valid tax invoice from the supplier to claim this.
Box 6 — Total input tax (calculated)
SARS calculates this as 15/115 × Box 5. This is the VAT you are claiming back.
Box 7 — VAT payable / refundable
This is Box 4 minus Box 6. If positive, you owe SARS. If negative, SARS owes you a refund.
Common Mistakes to Avoid
- Claiming VAT without a valid tax invoice: SARS can disallow input VAT if you cannot produce a compliant tax invoice. The invoice must include the supplier's VAT number, your VAT number, the VAT amount, and the date.
- Missing the submission deadline: VAT returns are due on the last business day of the month following the end of your VAT period. Late submission attracts a 10% penalty plus interest.
- Entering VAT-exclusive amounts: Most boxes require the VAT-inclusive (gross) amount. Check each box carefully.
- Forgetting zero-rated and exempt supplies: These must still be declared even though no VAT is charged.
How Xage Accounting Helps
Xage Accounting tracks every journal entry's tax type (standard, zero-rated, exempt, or none). When you open the VAT Return section, the system automatically calculates each box based on your transactions for the period. You can review line-by-line, then export the figures to enter into eFiling. No manual calculations required.
Paying Your VAT
If you owe VAT, you can pay via:
- eFiling: Pay directly from SARS eFiling using EFT
- SARS branch: Not recommended due to long queues
- Internet banking: Use SARS as the beneficiary with your VAT reference number
Payment must reach SARS by the same deadline as submission. Late payment attracts 10% penalty on the outstanding amount plus interest at the prescribed rate.
VAT Refunds
If your input VAT exceeds your output VAT (common in export businesses), SARS will refund the difference. Refunds typically take 21 business days if your eFiling profile is verified and compliant. SARS may request supporting documents before releasing refunds.