Value-Added Tax (VAT) is a 15% tax on most goods and services in South Africa, collected by businesses for SARS since 1991. It funds public services like healthcare, roads, and education. For example, a R100 item costs R115 with VAT R15 goes to SARS. Businesses earning over R1 million annually must register as VAT vendors, file returns, and can claim input tax credits on business expenses. Some items, like basic foods (brown bread, milk), are zero-rated, meaning no VAT applies. Exempt items, like education services, dont charge VAT either. Confused about VAT on your invoice? Use our Add VAT or Remove VAT tools to calculate it instantly.
SARS taxes personal income progressively higher earners pay a larger percentage. For 2025, tax rates start at 18% for income up to R237,100 and climb to 45% above R1,817,000 annually. PAYE (Pay As You Earn) is deducted monthly from salaries, and UIF (Unemployment Insurance Fund) takes 1% of your income, capped at R177.12 monthly. Medical aid tax credits reduce your tax: R364 for the main member, R364 for the first dependent, and R246 for each additional dependent. These credits lower your taxable income, boosting your take-home pay. Our Tax Calculator does the math for you just enter your salary and dependents to see your net pay after deductions.
In South Africa, everyone interacts with VAT and taxes differently. Consumers pay 15% VAT on most purchases, included in the price at checkout. Businesses collect VAT from customers and pay it to SARS, minus any VAT they have paid on business inputs. For taxes, employees have PAYE deducted automatically, while freelancers and sole proprietors file annual returns with SARS. High earners (above R237,100 yearly) face steeper tax rates, but rebates like the primary rebate (R17,235 in 2025) and medical credits help. Not sure where you stand? Try our tools or read more about your obligations on the SARS website.