Method of VAT collection in South Africa

VAT collection article - image 444333Every country has regulations and systems for applying VAT (Value Added Tax). VAT is not applied at a flat rate when the product has been completed. Instead, it is applied step-wise as the product is being developed. Value is added at each development stage when a product is created. The cumulative value is termed the total VAT at the end of the development process. In addition, this figure is included in the product’s price and paid by the customer. As it is written above, the regulations for calculating VAT vary from one country to the other. In South Africa, a particular set of regulations is also applied by the country’s policies to determine VAT.

VAT in South Africa and the implications

  • In South Africa, VAT is applied at a fixed rate of 14% for all products and services. However, if you are not a South African national and have made purchases while touring the country, you would not be required to pay VAT.
  • There is a price limit above which buyers can reclaim the VAT they have paid. For instance, if you have purchased a product with a price higher than R250, you can apply for a VAT refund. There is a proper process which you need to follow in this relation.

Process used to get VAT refund

If you are not a national of South Africa, you can claim a refund of the VAT paid. You need to take a few key steps in this relationship.

  • If you are a foreigner, you can get a VAT refund by getting a proper invoice from the shopkeeper. This is an assurance that you have paid VAT in South Africa even after not being a resident. The invoice is used when you are applying for a VAT refund.
  • The name and address of the buyer have to be provided for claiming the VAT refund. These details are used for verification.
  • There should be a purchasing receipt that shows the price of the product. It should also highlight that the price includes the VAT charged at 14%. If all this information is present, it would be easy for the user to get a VAT refund.