VAT explained for SA freelancers

When to register, how to invoice, what to claim, and how to file. South African VAT in plain English — without the jargon.

Updated By the ZACalc team

The basics

VAT is a 15% tax on most goods and services. If you're a registered vendor, you charge 15% on what you sell (output VAT) and claim back the 15% on what you buy (input VAT). You pay SARS the difference — every two months for most small businesses.

When must I register?

  • Compulsory: When taxable supplies exceed R1 000 000 in any rolling 12-month window.
  • Voluntary: Once you exceed R50 000 in 12 months, you may register. Useful if your clients are mostly VAT-registered businesses.

Voluntary registration adds admin (bi-monthly returns, record-keeping). Don't register unless your input VAT will materially exceed the cost of compliance.

What a valid tax invoice looks like

  • The words "tax invoice", "VAT invoice", or "invoice".
  • Your business name, address and VAT number.
  • Customer name and address (and their VAT number if > R5 000).
  • Sequential invoice number and date.
  • Description of goods/services, quantity and unit price.
  • VAT amount shown separately, plus total inclusive amount.

What you can and can't claim

You can claim input VAT on business expenses where you have a valid tax invoice. You cannot claim VAT on entertainment, club membership fees, or the purchase of a passenger car (with limited exceptions). Mixed-use expenses (cellphone, internet) must be apportioned.

Filing rhythm

Most small businesses are Category A or B: file every two months on the 25th. Late filing or payment triggers a 10% penalty plus interest. Use SARS eFiling and reconcile against your bookkeeping every cycle.