Value-added tax is an indirect tax on spending, and SARS sets out how it applies to everything from a loaf of bread to a lawyer’s invoice. This guide is as at October 2026. It sits beside our explainers on income tax brackets and rebates and transfer duty.
What is VAT?
SARS describes VAT as “an indirect tax on the consumption of goods and services”. Businesses called vendors charge it on their sales and pass it to SARS. The standard rate is 15%. The planned rise to 15.5% from 1 May 2025 was reversed.
A vendor does not hand over everything it charges. It deducts the VAT it paid its own suppliers, called input tax, and pays SARS the difference. If the VAT paid exceeds the VAT charged, it claims a refund. SARS says VAT is charged at each stage of production and distribution.
Which foods are zero-rated?
SARS lists the basic foods that carry a rate of 0% in its VAT 404 guide for vendors:
- brown bread and brown bread flour
- hens’ eggs
- fresh vegetables and fruit
- dried beans, lentils and other edible legumes and pulses
- maize meal, dried mealies, mealie rice and samp
- rice
- pilchards in tins or cans
- vegetable cooking oil, but not olive oil
- milk, cultured milk, milk powder and dairy powder blend
Zero-rated is not the same as untaxed. The vendor still charges VAT at 0% and can claim back the VAT on its own costs in full.
Compulsory registrationVoluntary registration
Source: SARS VAT page, citing the Budget Speech of 25 February 2026. Effective 1 April 2026. Chart: Rand Desk
What does not qualify?
The guide says most other groceries are standard-rated: meat, fish, white bread, snacks, most canned foods, cool drinks and cleaning materials. The zero rate also falls away when a listed food is prepared for immediate consumption, such as a glass of milk in a restaurant, a pre-packed salad with dressing or a take-away sandwich. It falls away as well when a standard-rated item is sold in the same pack, for example a pack of rice with a flavouring sachet or a fruit hamper with chocolates.
What is exempt from VAT?
Exempt supplies differ from zero-rated ones. A vendor making only exempt supplies cannot register and cannot claim input tax. SARS lists, among others, rental of residential accommodation, passenger transport by taxi, bus or train, certain educational services, childcare in a crèche or after-school care centre, and certain financial services.
How much VAT is in a price?
Prices charged or advertised by a vendor must include VAT. To find the VAT in a R100 standard-rated price, multiply by 15 and divide by 115. That gives R13.04, leaving R86.96 before tax.
Who has to register?
In the Budget Speech on 25 February 2026, the Minister of Finance raised the compulsory registration threshold from R1 million to R2.3 million of taxable supplies. The voluntary threshold rose from R50,000 to R120,000. Both took effect on 1 April 2026.
SARS invited public comment on 17 August 2026 on a VAT Modernisation Consultation Paper, which proposes a new digital VAT model.
