Is South Africa's VAT rate still 15% after the 2025 proposals?

Yes. The standard rate is 15% and has remained unchanged since 1 April 2018. The February 2025 Budget proposed increasing VAT to 15.5% on 1 May 2025 and then to 16% in April 2026. Both increases were reversed by amending legislation enacted on 25 April 2025 following coalition-partner opposition and a court challenge. The February 2026 Budget confirmed the 15% rate for 2026/27.

What is the mandatory VAT registration threshold in South Africa from 2026?

From 1 April 2026, mandatory VAT registration is triggered when taxable supplies in any rolling 12-month period exceed ZAR 2.3 million (raised from the previous ZAR 1 million threshold). Voluntary registration is available from ZAR 120,000 in taxable supplies over 12 months (raised from ZAR 50,000). Both thresholds exclude exempt supplies but include zero-rated supplies.

What are the 19 zero-rated basic food items in South Africa?

The 19 items listed in Schedule 2 of the VAT Act are: brown bread, maize meal, samp, mealie rice, dried mealies, dried beans, lentils, canned pilchards or sardinella, rice, fresh fruit and vegetables, vegetable cooking oil, unflavoured milk, cultured milk (maas), milk powder, brown wheaten meal, hen's eggs in shell, edible legumes and pulses, fresh or frozen poultry (chicken), and brown bread flour.

What is the difference between zero-rated and VAT-exempt supplies in South Africa?

Zero-rated supplies are taxable at 0%: the vendor charges no VAT on the sale but can recover all input VAT paid on related costs. Exempt supplies fall outside the VAT system: no VAT is charged on the sale, but the vendor also cannot recover input VAT on related costs, which becomes a business expense. Examples of exempt supplies include residential rental, non-fee financial services, and public transport.

How often do South African VAT vendors file VAT201 returns?

Most vendors file bi-monthly via SARS eFiling: Category A covers periods ending in odd months, Category B in even months. Vendors with annual taxable supplies above ZAR 30 million file monthly (Category C). Qualifying farming operations file every six months. For eFiling, returns and payments are due by the last business day of the month following the tax period; manual branch submissions are due by the 25th.

VAT and Sales Tax in South Africa — Rates, Rules & Filing

South African Value-Added Tax is governed by the Value-Added Tax Act 89 of 1991 and administered by the South African Revenue Service (SARS). The standard rate of 15% has been in place since 1 April 2018 (raised from 14%) and was confirmed unchanged for 2026/27 in the February 2026 Budget. VAT is the country's second-largest revenue source, generating roughly ZAR 520 billion annually. Understanding its rates, registration thresholds, zero-rated categories, and filing mechanics is essential for any business operating in South Africa. A qualified tax professional can help you determine whether registration is mandatory or beneficial given the 2026 threshold changes.

What is the current South Africa VAT rate and what happened to the 2025 increase?

The standard VAT rate is 15%, a figure that survived a significant political contest in 2025. The February 2025 Budget proposed raising VAT to 15.5% from 1 May 2025 and then to 16% from 1 April 2026, citing a ZAR 75 billion fiscal shortfall. Coalition partner the Democratic Alliance challenged the increase on the basis of inadequate public consultation under the Government of National Unity framework. Following Parliamentary pressure and a court challenge, the National Treasury reversed both planned increases. Amending legislation was enacted on 25 April 2025, and a brief period during which some systems had begun processing at 15.5% was corrected retroactively. The 15% rate therefore applies continuously with no gap, and the February 2026 Budget confirmed no further increase for 2026/27. Businesses that filed VAT201 returns covering any portion of late April or May 2025 were advised by SARS to verify Fields 1 and 12 for rate consistency (SARS FAQ: VAT Rate Increase, April 2025). The episode illustrates VAT's political sensitivity under coalition governance; future rate-rise proposals remain plausible given ongoing fiscal consolidation pressures [SC1, SC2].

What supplies are zero-rated for South Africa VAT?

Zero-rated supplies are taxable at 0%, meaning no VAT is charged on the sale but the vendor retains the right to recover input VAT paid on related costs. Schedule 2 of the VAT Act lists the main categories.

Category	Key examples
Basic foodstuffs (19 items)	Brown bread, maize meal, samp, mealie rice, dried mealies, dried beans, lentils, pilchards/sardinella in tins, rice, fresh fruit and vegetables, vegetable cooking oil, unflavoured milk, cultured milk (maas), milk powder, brown wheaten meal, hen's eggs, edible legumes and pulses, poultry (fresh/frozen chicken)
Fuel levy goods	Petrol, diesel (including biodiesel), illuminating paraffin
Agricultural inputs	Seeds, fertiliser, pesticides, certain animal feeds, animal remedies
Exports of goods	Goods physically removed from South Africa within the prescribed export window
International transport	Passenger and freight transport crossing the SA border, including the SA leg of an international journey
Going-concern sales	Sale of an enterprise as a going concern between two VAT-registered vendors under a written agreement
Services to non-residents	Services consumed entirely outside South Africa

The practical significance of the zero/exempt distinction is material: zero-rated vendors can claim back all input VAT on their costs, preserving the recovery chain. Vendors dealing only in exempt supplies cannot [SC3, SC4].

What supplies are exempt from South Africa VAT?

Exempt supplies fall outside the output VAT calculation entirely. A vendor making only exempt supplies cannot register for VAT and cannot recover any input VAT as a cost, which is absorbed into pricing. The principal exempt categories under Schedule 1 and relevant VAT Act provisions are: non-fee-based financial services (interest on loans, insurance premiums, foreign-exchange trading, securities dealings); residential rental accommodation (commercial property rent remains taxable at 15%); public road and rail passenger transport (minibus taxis, buses, trains); educational services provided by approved educational institutions; healthcare services delivered by registered medical practitioners and certain healthcare facilities; and charitable fundraising events by qualifying Public Benefit Organisations. Note that fee-based financial services such as bank service fees are taxable at the standard 15% rate, creating a partial-exemption apportionment challenge for financial institutions [SC3, SC4].

What are the VAT registration thresholds from 1 April 2026?

From 1 April 2026, SARS increased both registration thresholds significantly. Mandatory registration is now triggered when taxable supplies in any 12-month rolling period exceed ZAR 2.3 million (previously ZAR 1 million). Voluntary registration is available from ZAR 120,000 in taxable supplies over 12 months (previously ZAR 50,000). Both thresholds are calculated on taxable supplies only, meaning zero-rated supplies count toward the threshold but exempt supplies do not.

Businesses with turnover between ZAR 1 million and ZAR 2.3 million that were previously registered have three options under the new rules: remain voluntarily registered (the threshold for voluntary registration is ZAR 120,000 so they qualify), apply to deregister if they prefer simplicity, or continue as registered vendors and retain their input VAT recovery rights. The raised threshold aligns the VAT registration entry point with the Turnover Tax upper limit, simplifying the micro-business tax choice. Businesses expecting to cross ZAR 2.3 million must register within 21 business days of the threshold being exceeded or reasonably expected to be exceeded [SC1, SC5].

How do VAT201 returns work and when are they due?

Registered vendors file a VAT201 Vendor Declaration via SARS eFiling. Most small and medium businesses are assigned to a bi-monthly filing category: Category A (periods ending in odd months) or Category B (periods ending in even months). Vendors with annual taxable supplies exceeding ZAR 30 million file monthly under Category C. Qualifying farming operations may file every six months (Category D) and certain other entities annually (Category E).

For eFiling submissions, both the return and payment are due by the last business day of the month following the tax period. Manual submissions at a SARS branch are due by the 25th of that month. Late submission attracts a penalty under Section 39 of the Tax Administration Act; late payment attracts interest at the prescribed rate under Section 187. The VAT201 form captures output tax (VAT charged on sales), input tax (VAT recoverable on purchases), and produces a net payable or refundable position. Tax invoices complying with Section 20 of the VAT Act must be retained for five years as supporting documentation for any input VAT claim [SC1, SC6].

For the broader South African tax context, see the South Africa country overview. Registration thresholds, filing categories, and zero-rated classifications can interact in complex ways for businesses operating across multiple supply types or on the border of the mandatory threshold; consulting a registered tax professional before making registration or deregistration decisions is the appropriate step.

VAT and Sales Tax in South Africa

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