VAT and invoicing in South Africa (2026): a practical guide

South African value-added tax (VAT) is charged by registered businesses, called vendors, on most goods and services they supply, and on imports. The tax is administered by the South African Revenue Service (SARS) under the Value-Added Tax Act, 1991. This guide explains what a small business needs to know in 2026: the rates, the new registration thresholds, how to write a valid tax invoice, when to file and pay, and what SARS is planning for e-invoicing.

VAT in South Africa at a glance

The rate did not go up. The 2025 Budget proposed raising VAT to 15.5% in May 2025 and to 16% in April 2026. Both increases were reversed in 2025, and the Budget of 25 February 2026 kept the rate at 15%.

Zero-rated supplies (0%) include exported goods and services, certain basic foodstuffs, fuel subject to the fuel levy, some goods used for farming and the sale of a business as a going concern. The basic foodstuffs include brown bread, maize meal, samp, rice, dried beans, lentils, eggs, fresh fruit and vegetables, milk, tinned pilchards and vegetable cooking oil (but not olive oil). A vendor charges 0% on these supplies and can still deduct the VAT on related costs.

Exempt supplies carry no VAT, and you cannot deduct the VAT on the costs of making them. The main ones are financial services (fee-based financial services remain taxable at 15%), residential rentals, local road and rail passenger transport and educational services.

One rule surprises many new vendors: every price you charge, advertise or quote must include VAT. A shelf price or a quote that adds VAT on top at the till is not allowed.

Who must register and when

From 1 April 2026, SARS applies new thresholds announced in Budget 2026:

• Compulsory registration: when your taxable supplies exceed, or are likely to exceed, R2.3 million in any 12-month period (it was R1 million). You must also register if you have a written contract under which you expect to pass that amount in the next 12 months.
• Voluntary registration: possible once your taxable supplies exceed R120,000 in the past 12 months (it was R50,000). Voluntary registration makes sense if most of your customers are vendors who can deduct your VAT, and you want to deduct the VAT on your own costs.
• Foreign suppliers of electronic services to South African customers follow the same R2.3 million threshold.

SARS will write to voluntarily registered vendors whose taxable supplies in the past 12 months were below R120,000 and propose to cancel their registration; they have 80 business days to object. The amending bill was still going through Parliament when SARS began applying the new thresholds, but SARS confirms that they apply from 1 April 2026.

If you passed the old R1 million threshold before April 2026 and did not register, the new threshold does not wipe that out: penalties and a backdated registration may still apply.

You cannot register for VAT if you make only exempt supplies.

VAT returns and payment

You declare VAT on the VAT201 return. SARS allocates a tax period (category) when you register:

Deadlines:

• If you file and pay manually, the return and payment are due by the 25th of the month after the tax period. If the 25th is not a business day, the deadline moves to the business day before.
• If you file and pay through eFiling, both are due by the last business day of that month.
• If you file on eFiling but pay another way, the return is due on the last business day and the payment on the 25th.

Late payment attracts a penalty of 10% of the outstanding VAT plus interest at the prescribed rate. Input tax you forgot to claim can be deducted in a later return, but only within five years.

Invoices: what South African law requires

Section 20 of the VAT Act sets out what a tax invoice must show, and you must issue it within 21 days of the supply, whether or not the customer asks for it. Without a valid tax invoice, your customer cannot deduct the VAT.

Price and VAT can be shown in one of three ways: the price, the VAT and the total separately; the total with a statement that it includes VAT at 15%; or the total with the VAT amount included in it.

A few more rules:

• Small sales: for a supply of R50 or less, no tax invoice is needed, but you still need a document such as a till slip that shows the VAT.
• Zero-rated supplies always need a full tax invoice, even below R5,000.
• Currency: a tax invoice must be in rand, except for zero-rated supplies such as exports and certain electronic services supplied by foreign suppliers.
• Numbering: each invoice needs a serial number; never reuse or skip numbers without a record of why.

Correcting an invoice: credit and debit notes

You do not edit or delete a tax invoice once it is issued. Under section 21 you issue a credit note (when the amount goes down) or a debit note (when it goes up) if a supply is cancelled, its nature changes, the price is changed by agreement (including a discount), goods are returned, or the invoice over- or understated the price. A credit or debit note must show:

• the words “credit note” or “debit note”
• your name, address and VAT number, and the customer's name and address (unless the original was an abridged invoice)
• the date it is issued
• the amount by which the value and the VAT changed
• a brief explanation of why
• enough information to identify the original invoice, such as its number and date

A credit note is not needed for a prompt-payment discount whose terms are printed on the original tax invoice.

How long to keep records

Keep tax invoices, credit and debit notes, and all other records of your transactions for at least five years.

E-invoicing in South Africa: what SARS is planning

South Africa has no e-invoicing mandate today. You may issue tax invoices electronically, for example as PDFs by email, without prior approval from SARS, as long as they contain all the required details and you keep them like any other record.

That is set to change. On 17 August 2026, SARS published a VAT Modernisation consultation paper proposing a digital VAT model built on three pillars: e-invoicing, an interoperability framework with accredited service providers, and digital reporting of VAT data to SARS. Comments were due by 16 October 2026. The proposed phases are:

Large taxpayers and government entities would go first, small and medium businesses later, and business-to-consumer sales in a later phase. None of this is law yet: penalties, exemptions and the final dates will come with draft regulations. When the mandate arrives, you will need a SARS-accredited solution for the e-invoicing part.

A worked example in rand

You run a small consulting firm registered for VAT, on a two-monthly period. In January and February you invoice clients R120,000 plus 15% VAT.

1. 1Output VAT: R120,000 × 15% = R18,000; your clients pay R138,000 in total.
2. 2Input VAT: you buy a laptop for R20,000 plus R3,000 VAT and pay for office rent and software of R30,000 plus R4,500 VAT, all with valid tax invoices. Input VAT = R3,000 + R4,500 = R7,500.
3. 3VAT payable: R18,000 − R7,500 = R10,500, due by the last business day of March if you file and pay on eFiling.

To find the VAT inside a VAT-inclusive price, multiply by 15 and divide by 115: R1,150 × 15 ÷ 115 = R150 VAT, so the price before VAT is R1,000.

If your input VAT is higher than your output VAT, for example in a period with a large equipment purchase, SARS refunds the difference.

Common VAT mistakes in South Africa

1. 1Quoting prices without VAT. Prices you advertise or quote must include VAT.
2. 2Issuing an abridged invoice when a full one is needed, for example for a zero-rated supply or a sale above R5,000, so the customer cannot claim the VAT.
3. 3Claiming input VAT without a valid tax invoice, or without the right details on it, such as your VAT number as the customer on a full tax invoice.
4. 4Not paying suppliers. If you claimed input VAT on a purchase and have not paid the supplier in full within 12 months, you must pay back the VAT on the unpaid part.
5. 5Missing the deadline by mixing channels, for example filing on eFiling but paying at the bank after the 25th.
6. 6Forgetting to cancel a voluntary registration when turnover falls, or to register when it rises above R2.3 million.
7. 7Invoicing in a foreign currency for a sale that is not zero-rated.

How Clientlly helps

Clientlly keeps the day-to-day work behind a correct VAT201 in one place:

• Sequential invoice numbering per series, with the 15% and 0% rates on every invoice.
• Credit notes linked to the original invoice, so corrections leave a clear trail.
• Sales and purchase VAT books per rate, including exports, and VAT reports for you and your accountant, with Excel and PDF exports.
• Receipt scanning that reads the VAT automatically, so your input VAT is backed by the documents.
• Invoice PDFs in your client's language, multiple currencies for export clients, a card payment link on the invoice, and a record of when each invoice was opened.
• Automatic reminders 3, 14 and 30 days after the due date, and recurring invoices for retainers. See our guide to getting paid faster.
• A mobile app, and import of clients, suppliers, products and opening balances from Excel or CSV when you move from another system.

Clientlly is not a SARS-accredited e-invoicing solution; when e-invoicing becomes mandatory, that part will need an accredited provider. See the invoicing features and the accounting module.