VAT confuses a lot of self-employed tradesmen, and getting it wrong gets expensive. Here's the plain-English version of what every electrician, plumber and builder in South Africa needs to know.
Do I have to register for VAT?
It depends on your turnover:
- Compulsory: You must register for VAT once your taxable turnover exceeds R1 million in any rolling 12-month period (or you reasonably expect it to).
- Voluntary: You may register once your turnover passes R50,000 in a 12-month period. Some tradesmen do this so they can claim back VAT on materials.
If you're under R1 million and not registered, you simply don't charge VAT. Your prices are your prices.
The VAT rate is 15%
South Africa's standard VAT rate is 15%. If you're registered, you add 15% to what you charge, this is your output VAT, which you collect on behalf of SARS.
Output VAT vs input VAT
This is the bit worth understanding, because it's where registered tradesmen save money:
- Output VAT, the 15% you add to your invoices and collect from customers.
- Input VAT, the 15% VAT you pay on business purchases: cable, fittings, tools, fuel, materials from VAT-registered suppliers.
You pay SARS the difference: Output VAT − Input VAT = what you owe. So every VAT invoice you keep from a supplier reduces your bill. Lose the invoices and you lose the deduction.
BlitzBooks tracks output VAT on every invoice and keeps your VAT report ready for SARS.
Try it freeKeep every supplier invoice. Your input VAT claims are only as good as your records. A shoebox of faded till slips is money left on the table at SARS.
What's a valid tax invoice?
If you're VAT-registered, your invoices must legally show certain things, including:
- The words "Tax Invoice"
- Your business name, address and VAT number
- The customer's details (for invoices over R5,000)
- An invoice number and date
- A description of the work/goods
- The amount, the VAT charged (15%), and the total
Get this wrong and the customer can't claim their input VAT, and you look unprofessional. Software that builds compliant tax invoices automatically takes this worry away.
VAT201 returns
Once registered, you submit a VAT201 return to SARS (most small vendors do this every two months) declaring your output VAT, claiming your input VAT, and paying the difference. Staying on top of your numbers all year makes this a five-minute job instead of a panicked weekend.
Let the app handle the VAT maths
BlitzBooks adds 15% VAT to every quote and invoice automatically and keeps a running VAT report ready for your SARS submission. No spreadsheets, no shoebox.
Start free, 7 days, no card →Disclaimer: This is general information, not tax advice. VAT rules change and every business is different, confirm your position with SARS or a registered tax practitioner.