South African VAT on invoice lines: 15%, 0% and exempt
How a South African business sets VAT on each invoice line in Achekam, what the screen cannot show about exempt supplies, and how tax numbers print.
By Achekam · · 5 min read · For Running a business businesses in South Africa
A South African invoice can carry three kinds of supply side by side: standard-rated lines that attract VAT at 15%, zero-rated lines that are taxable at 0%, and exempt lines that sit outside VAT altogether. On the customer's copy, a zero-rated line and an exempt line can look identical. For your VAT return, they are not.
This article explains how VAT is set on each invoice line in Achekam, where the invoice screen falls short on that distinction, and what you should keep alongside your invoices so your accountant can prepare the return correctly.
The approved 15% rule and the date it starts
South Africa's standard VAT rate has been 15% since 1 April 2018, and it was 14% before that. In Achekam, VAT at 15% is held as an approved rule, effective from 1 April 2018.
The rule matters because Achekam does not keep a rate typed into a setting somewhere. It takes the standard rate for an invoice from the approved rule in force on the document's date in your workspace's country. If no approved rule applies to a date, Achekam refuses rather than assumes a rate. For a South African business invoicing today, the 15% rule applies.
Choosing 15% or 0% on each line
A South African business sets each invoice line's VAT to 15% or 0%. Picture a business that supplies and installs equipment and also sells goods that it exports directly to a customer in Botswana. The local supply and installation lines carry 15%. The exported goods, if your accountant confirms they qualify for zero rating, carry 0%.
Set the rate line by line, not invoice by invoice. A mixed invoice is normal, and the line is where the decision belongs.
Achekam does not check whether your business is registered for VAT before it charges VAT on your documents. If you are not a VAT vendor, it is up to you to make sure no line carries VAT.
0% versus exempt: the gap on the invoice screen
Here is the limit you need to know. The invoice screen offers 15% or 0% and does not tell zero-rated and exempt apart. Both are entered as 0%.
That is fine for the customer, who pays no VAT either way. It is not fine for your VAT records. A zero-rated supply is a taxable supply at a rate of 0%. An exempt supply is not a taxable supply at all. The two are treated differently on your VAT return, and making exempt supplies can affect how much input VAT you are entitled to claim. Your accountant needs to know which 0% lines are which. SARS's VAT 404 Guide for Vendors explains zero-rated exports, exempt supplies and the limits on input tax in detail.
Until the screen can record the difference, close the gap yourself:
- Name it in the line description. Write "zero-rated: export" or "exempt supply" in the description of every 0% line.
- Keep a short register. List each invoice with exempt lines, the amount and the reason, month by month.
- Agree the categories once. Sit down with your accountant and list which of your products or services are zero-rated and which are exempt, so staff are not deciding case by case.
The rate in force on the invoice date, and credit notes
When an invoice line states no rate, VAT is taken at the rate in force on the invoice date. A credit note is always issued from the invoice it corrects, and it uses its original invoice's date and tax codes.
In words: if the standard rate changed between an invoice and its credit note, the credit note would reverse VAT at the rate the invoice charged, not at the new rate. That was exactly the position for South African businesses crediting invoices dated before 1 April 2018, which carried 14%, after the rate had moved to 15%. Because the credit note follows the original invoice, the VAT you give back always matches the VAT you charged.
How tax numbers print
Two numbers can appear on your documents: yours and your customer's.
Your VAT number. You enter your VAT registration number in Settings under Firm Profile. Documents made by Achekam's server print it, and they are titled Tax Invoice only when a VAT number is set.
There is one exception to watch. The invoice PDF downloaded or e-mailed from the invoice screen is always headed TAX INVOICE and cites the South African VAT Act, whatever your VAT registration. A business that is not registered for VAT should be aware of this before it sends invoices from the invoice screen; a document headed TAX INVOICE from a non-vendor confuses customers and their accountants.
Your customer's tax number. A customer's tax number prints on documents as a VAT number only when it looks like a South African VAT number. Otherwise it prints as a tax number. If a South African customer's VAT number prints as a "tax number", check it for a typing error before you send the invoice.
What to tell your accountant
Each month or VAT period, give your accountant:
- the list of invoices with 0% lines, marked zero-rated or exempt;
- any credit notes, so they can see the original invoice dates;
- any invoice where the customer's VAT number did not print as a VAT number;
- confirmation that your VAT number in Firm Profile is correct.
The invoice lines are only the start of the VAT story. To see how output and input VAT reach the return, read preparing your VAT201 when your books are in Achekam. Shops with mixed baskets face the same 0%-versus-exempt question at the till; see mixed-rate baskets in retail. And if you also trade in Nigeria or Kenya, the rules there work differently, as explained in charging VAT in Nigeria and Kenya while rates await approval.
This week, pull last month's invoices with 0% lines and mark each one zero-rated or exempt. It takes minutes now and saves a difficult conversation at return time.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
