The rate: 15% — and the 2025 increase that never happened
Value-added tax (VAT) in South Africa is levied at a standard rate of 15% by the South African Revenue Service (SARS) under the Value-Added Tax Act 89 of 1991. If your tax team's tables say anything else, they have been caught by the 2025 saga: the March 2025 Budget announced an increase to 15.5% from 1 May 2025, with 16% to follow from 1 April 2026 — and Parliament then reversed the increase before it ever took effect. The reversal is now law as s 13 of the Rates and Monetary Amounts and Amendment of Revenue Laws Act 3 of 2026 (GG 54446, deemed effective 1 May 2025), and the February 2026 Budget left the rate untouched. The rate never actually changed. Figures last reviewed 16 July 2026.
VAT is levied at the standard rate of 15% on the supply of goods and services by registered vendors.
For a foreign group, the rate is the easy part. The two things that changed recently — and that most guides still get wrong — are the registration threshold (more than doubled from 1 April 2026) and the electronic-services regime (rewritten from 1 April 2025). Both are covered next.
When must a foreign company register? The R2.3 million threshold
Registration turns on two questions: do you carry on an "enterprise" in South Africa, and have your taxable supplies crossed the threshold? There is no permanent-establishment test, no requirement of an office, and no requirement that the company be incorporated locally. The Act's definition reaches any activity carried on partly in the Republic:
(a) in the case of any vendor, any enterprise or activity which is carried on continuously or regularly by any person in the Republic or partly in the Republic and in the course or furtherance of which goods or services are supplied to any other person for a consideration, whether or not for profit, including any enterprise or activity carried on in the form of a commercial, financial, industrial, mining, farming, fishing, municipal or professional concern or any other concern of a continuing nature or in the form of an association or club;
Note — The phrase "in the Republic or partly in the Republic" is the whole game for non-residents: continuous or regular activity that touches South Africa is enough, even where the company has no taxable presence for corporate income tax purposes. VAT "enterprise" is wider than a treaty permanent establishment — you can owe VAT registration with no income-tax presence at all.
The threshold itself is the 2026 trap. From 1 April 2026 the compulsory registration threshold rose from R1 million to R2.3 million of taxable supplies in any consecutive 12-month period — most online guides (and some of SARS's own older publications) still show the old figure. Voluntary registration is available from R120 000 of taxable supplies (up from R50 000), which lets a new subsidiary recover input VAT on setup costs.
It is compulsory for a person to register for VAT if the value of taxable supplies made or to be made, is in excess of R2.3 million in any consecutive 12 month period.
Note — Strictly, the new thresholds are carried in clause 20 of the 2026 Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill (25 February 2026), deemed to take effect from 1 April 2026. As at mid-July 2026 that Bill had not yet been passed by Parliament — South African rates bills are routinely enacted retrospectively — but SARS is administering the new thresholds now. A signed contract that will exceed the threshold also triggers liability (s 23(1)(b)).
The deadline is short. In SARS's words: "An application for a compulsory VAT registration must be made within 21 business days from the date the R2.3 million is or will be exceeded." How each common market-entry pattern maps onto the enterprise test:
| How you sell into South Africa | VAT registration position |
|---|---|
| Goods shipped from abroad; your SA customer is the importer of record | Generally no enterprise in SA for you — the customer pays import VAT at the border |
| Goods you import and sell from South African stock | Enterprise carried on partly in SA — local sales count towards R2.3 million |
| Services performed in South Africa (projects, secondees, installations) | Enterprise carried on partly in SA — those supplies count towards the threshold |
| Electronic services to any SA consumers or unregistered businesses | Deemed enterprise — register once supplies exceed R2.3 million in any 12 months |
| Electronic services solely to SA VAT-registered vendors | Excluded from the regime since 1 April 2025 — customers self-assess imported-services VAT only on any non-taxable use |
The process for a foreign-owned company
Registration runs through SARS eFiling (or a virtual booked appointment), and for a foreign-owned applicant it is rarely instant. Expect to submit company registration records from the Companies and Intellectual Property Commission (CIPC) — the local subsidiary or external-company (branch) registration — plus the representative's identity documents and proof of appointment, proof of address, bank account details, and evidence of actual or imminent taxable supplies (SARS refuses speculative registrations). SARS's risk engine frequently routes new foreign-owned applications into verification, with a document request and often a video or telephonic interview of the representative. A clean application can be processed in days; practitioners typically budget two to eight weeks where verification is triggered — a practice observation, not an official SARS timeline. A liability date can be backdated up to six months on eFiling; older backdating needs a branch visit with proof.
Electronic services: the 2025 regime and the B2B exclusion
South Africa taxes foreign-supplied digital services — software licences, SaaS subscriptions, streaming, online content, cloud services — through a dedicated regime. The current rules are the Electronic Services Regulations in GN 5993 (GG 52293, 14 March 2025), a standalone set effective 1 April 2025 that repealed and replaced the 2019 regulations entirely. A foreign supplier is deemed to carry on a South African enterprise when it supplies electronic services from abroad and any two of three proxies are present: the recipient is a South African resident; payment originates from a South African-registered bank; or the recipient has a South African business, residential or postal address. Registration becomes compulsory at the end of the month in which taxable supplies exceed R2.3 million in any consecutive 12-month period — SARS's guidance puts it plainly: "Non-resident suppliers of certain electronic services are also liable for compulsory VAT registration at the end of the month in which the total value of taxable supplies exceeds R2.3 million."
The 2025 rewrite's headline change is the business-to-business (B2B) exclusion:
Specifically excluded from the 2025 Regulations, (that is, from 1 April 2025), are supplies by foreign suppliers that make such supplies solely to VAT registered vendors.
Note — The practical effect: a foreign SaaS vendor whose entire South African customer base consists of VAT-registered vendors no longer needs a South African VAT registration at all. Verify every customer on the SARS VAT vendor search and retain the proof — the burden of showing "solely" is yours. The South African recipient self-accounts for imported-services VAT only to the extent the services are used other than for making taxable supplies — a fully taxable vendor typically owes nothing.
The exclusion is all-or-nothing. There is no de minimis and no percentage test — one consumer sale, or one sale to a small company that is not VAT-registered, destroys it for everything:
Supplies by a foreign electronic services supplier that is unable to determine that it makes supplies only to VAT registered vendors, or that makes supplies to a combination of VAT registered vendors and non-vendors are not excluded from the ambit of 'electronic services'. These foreign electronic suppliers are therefore required to register for VAT should the registration threshold be exceeded.
Two further points for digital businesses. First, platforms and intermediaries: since 1 April 2025 an intermediary (for example an app store or marketplace) may agree in writing with a foreign principal to account for the VAT as if the supplies were its own, with joint and several liability — and the 2026 Budget proposes making intermediary liability the default, though that is a proposal only and not yet law. Second, the exclusion only exists from 1 April 2025: liabilities for earlier periods survive, and SARS can still assess historic non-registration under the 2014/2019 rules. The e-services VAT analysis is the tax leg of the same digital market-entry review as data protection under the Protection of Personal Information Act (POPIA) — run them together.
The representative vendor and the bank-account question
Every vendor needs a representative vendor — the natural person responsible to SARS for the vendor's VAT duties (s 46 of the VAT Act). The general rule, in the words of SARS's registration guide, is that "The representative must be an individual and a resident of the Republic." In practice this is a local director, the subsidiary's financial manager, or the branch manager — the same kind of role as the resident public officer SARS requires for income tax. Choose someone genuinely involved: the representative is interviewed at verification and is personally responsible for the vendor's VAT duties.
For foreign electronic-services suppliers the rule was relaxed with effect from 24 December 2024 (by the Tax Administration Laws Amendment Act 43 of 2024, which added s 46(2) to the VAT Act):
A foreign electronic services supplier or non-resident intermediary is required to appoint a representative being a natural person, responsible for accounting for the receipt and payment of monies or funds in respect of any enterprise of the foreign electronic services supplier or non-resident intermediary, in the Republic. However, such natural person need not reside in the Republic.
Note — The same amendment relaxed the bank-account requirement: a qualifying foreign e-services supplier need not open a South African bank account, provided (among other conditions) it is resident in a country that has a double taxation agreement (DTA) in force with South Africa. The catch — SARS pays VAT refunds only into a South African account, so a supplier without one cannot actually receive refunds. Ordinary foreign vendors still need the SA-resident representative and, in practice, a South African bank account (opening one involves verification of offshore owners under the Financial Intelligence Centre Act (FICA) — see our FICA guide).
E-services suppliers also get a simplified registration channel: the VAT101 form and supporting pack go by email to SARS's dedicated e-commerce registration team, returns are filed on eFiling from abroad, and payment can be made by international bank transfer.
VAT on imports — goods at the border, services by reverse charge
Goods
Import VAT on goods is 15% of the "added tax value" (ATV), not of the invoice price. The ATV is the customs value plus a 10% uplift of the customs value (a proxy for transport and insurance) plus any non-rebated customs and excise duties — so the VAT works out to more than the headline rate on the customs value alone. Cash-flow plans that ignore the uplift, and the rule that VAT is paid to SARS Customs before the goods are released, understate landed cost. The one carve-out is for goods originating in the Southern African Customs Union (SACU) — Botswana, Lesotho, Namibia and eSwatini (the "BLNS" countries):
Goods that are imported from within the SACU region (that is, from BLNS countries) are not subject to customs duties and the 10% upliftment in value is not applied if the goods have their origin in a BLNS country. However, VAT is still payable on the importation of the goods into the RSA at the standard rate on the value for customs purposes, unless the goods are specifically exempt from VAT on importation.
Regular importers should apply for a deferment account — a credit facility with SARS Customs for duty and import VAT, secured by a bank guarantee — so that each consignment is not paid for at the border. A registered vendor that is the importer of record claims the import VAT back as input tax on its VAT201 return, supported by the customs declaration and proof of payment.
Imported services — the reverse charge
Services flowing the other way — from the foreign parent to the South African operation — are caught by s 7(1)(c) of the VAT Act: the South African recipient must self-assess 15% VAT on "imported services", but only to the extent the services are "utilized or consumed in the Republic otherwise than for the purpose of making taxable supplies". A fully taxable South African subsidiary generally has no reverse-charge liability on management fees; a partly exempt one (financial services, for instance), or services procured for a share transaction, does. Supplies of R100 or less are de minimis; a non-vendor recipient declares on form VAT215 and pays within 60 days (extended from 30 days with effect from 24 December 2024), while vendors account on the VAT201.
Exports and services to non-residents: when zero-rating works
Outbound, the rules reward the exporter who controls the logistics. Direct exports — where the South African vendor consigns or delivers the goods to an address abroad — are zero-rated. Indirect exports — where the foreign buyer (or its agent) collects the goods in South Africa — are standard-rated by default: the buyer then reclaims the VAT through the VAT Refund Administrator (VRA) after exporting, or the vendor may elect to zero-rate under Part 2 of the Export Regulations (GN R.316 of 2014) and take on the compliance risk itself. The windows are tight: under Part 1 the goods must be exported within 90 days of the tax invoice and the refund claim must reach the VRA within 90 days of export; under Part 2 the general rule is export within 90 days from the earlier of invoice or payment. The VRA scheme is goods-only — in SARS's words, "The VAT refund only applies to the acquisition of goods by the qualifying purchaser and not on the acquisition of services." — and it takes a commission of 1.5% of the VAT-inclusive price (minimum R10, maximum R250 per refund), with purchases per visit having to exceed R250 VAT-inclusive.
Services supplied to non-residents are zero-rated under s 11(2)(l) — but the carve-outs swallow more than foreign groups expect. Zero-rating fails where the services relate directly to land or movable property in South Africa, or where the non-resident client or anyone actually receiving the service is in South Africa when the services are rendered. The Supreme Court of Appeal has repeatedly sided with SARS on this:
The same logic standard-rated bureau-de-change services supplied to departing travellers in Master Currency v CSARS [2013] ZASCA 17 (the customers were physically in South Africa, airside), and in Diageo South Africa v CSARS [2020] ZASCA 34 a single supply of marketing services to non-resident brand owners was split under s 8(15), with the locally consumed goods component taxed at the standard rate. Price cross-border service lines on the assumption that anything consumed in South Africa will be standard-rated.
Finally, recovery: South Africa has no general VAT refund mechanism for unregistered foreign businesses — nothing like the EU's 13th Directive. The VRA refunds VAT on exported goods only; VAT on South African services is an irrecoverable cost unless you register as a vendor. For groups moving money in and out, the refund question also interacts with exchange control.
Tax invoices, currency and the e-invoicing question
South African tax invoices carry prescribed content (s 20 of the VAT Act), and the requirements step down with value:
| Consideration for the supply | Document required |
|---|---|
| More than R5 000 | Full tax invoice (s 20(4)) |
| R5 000 or less | Abridged tax invoice (s 20(5)) |
| R50 or less | No tax invoice required — keep the till slip or proof of payment |
Invoices must be issued within 21 days of the supply, and — the trap for group billing systems — must be denominated in Rand, except for zero-rated supplies (such as direct exports) and certain supplies by registered foreign electronic-services suppliers, which may be in foreign currency under VAT Notice 1594 of 2021 read with SARS's exchange-rate rulings. A standard-rated invoice issued in US dollars or euros can invalidate your South African customer's input-tax claim. The full content requirements are on SARS's tax-invoices page.
Is e-invoicing mandatory? No — as at July 2026 South Africa has no e-invoicing mandate. The legal framework now exists: the Tax Administration Laws Amendment Act 4 of 2026 (in force 1 April 2026) inserted "e-invoice" and "e-reporting" definitions into the VAT Act and empowered regulations for a voluntary e-reporting system. SARS has confirmed a multi-year VAT-modernisation programme, with design work and pilots from 2026 and onboarding of large vendors planned through 2029; commentators expect the first mandates around 2028, but SARS has fixed no date. Build flexibility into ERP plans — and be sceptical of vendors selling "mandatory SARS e-invoicing compliance" in 2026. VAT registration is only one item on the post-incorporation stack: see the full tax and employer registrations guide and the wider compliance hub.
Frequently asked questions
From 1 April 2026 the compulsory threshold is R2.3 million of taxable supplies in any consecutive 12-month period, raised from R1 million. Voluntary registration is possible from R120 000. SARS is administering the new thresholds now, although the amending Bill (deemed effective 1 April 2026) had not yet been passed by Parliament as at mid-2026 — rates bills are routinely enacted retrospectively. Once you cross the threshold, or sign a contract that will cross it, you must apply within 21 business days.
The standard rate is 15%. The March 2025 Budget announced an increase to 15.5% (with 16% to follow), but Parliament reversed it before it ever took effect — the reversal is now s 13 of the Rates and Monetary Amounts and Amendment of Revenue Laws Act 3 of 2026, deemed effective 1 May 2025. The February 2026 Budget left the rate unchanged. If your ERP tax tables were changed to 15.5% in anticipation, correct them: the rate never moved.
It depends on what you sell. Goods shipped from abroad where your South African customer is the importer of record: generally no registration for you — the customer pays import VAT at the border. Goods you import yourself and then sell locally, or services your people perform in South Africa: that is an enterprise carried on at least partly in South Africa, and those supplies count towards the R2.3 million threshold. Electronic services supplied to South African customers are deemed a South African enterprise under a two-out-of-three proxy test — you must register once they exceed R2.3 million in any 12 months, unless every South African customer is a VAT-registered vendor.
Since 1 April 2025, no — provided every South African customer is a VAT-registered vendor and you can prove it. Purely B2B foreign suppliers of electronic services are excluded from the regime. The customer does not automatically ‘reverse-charge’ the VAT either: imported-services VAT arises only to the extent the services are used for purposes other than making taxable supplies, so a fully taxable vendor typically owes nothing. But the exclusion is all-or-nothing: a single sale to a consumer or an unregistered small business puts all of your South African supplies back into the net, and you must register once they exceed R2.3 million in 12 months. Before April 2025 there was no B2B exclusion, so historic non-registration for earlier periods can still be assessed.
Essentially no. South Africa has no equivalent of the EU 13th-Directive refund for foreign businesses. The only mechanism for the unregistered is the VAT Refund Administrator (VRA) scheme, and it covers movable goods you export from South Africa — never services. VAT charged on South African hotels, car hire, professional fees or venue hire is an irrecoverable cost unless you register. That is why voluntary registration (possible from R120 000 of taxable supplies) can pay for itself for a startup subsidiary with significant setup costs.
For an ordinary registration, yes in practice: SARS requires a representative vendor who is a natural person resident in South Africa, and refunds are only paid into a South African bank account. Foreign suppliers of electronic services are the exception — since 24 December 2024 their representative need not reside in South Africa and no local bank account is required, subject to conditions (including residence in a country with a double taxation agreement with South Africa). Note the catch: even a qualifying e-services supplier cannot actually receive a VAT refund without a South African account.
Only a registered vendor can. If your South African company (or branch) is the importer of record and registered for VAT, the import VAT paid to SARS Customs is claimable as input tax on the VAT201 return, supported by the customs declaration and proof of payment; where a clearing agent imports on your behalf, you also need the agent statement. Regular importers can smooth cash flow with a deferment account (a credit facility with SARS secured by a bank guarantee). If you are not registered, import VAT is simply part of your landed cost.