List of Five goods on which no VAT is charged in South Africa. Here’s a quick look at five goods on which no VAT (Value Added Tax) is charged, offering a glimpse into items exempted from this tax to provide consumers with essential needs without the added financial burden.
| No VAT Charged Goods | Description/Examples | Importance |
|---|---|---|
| Basic Food Items | Bread, milk, eggs, and other staple foods. | Essential for basic nutrition and sustenance. |
| Education Services | Tuition fees for schools, colleges, and universities. | Facilitates access to education and promotes literacy. |
| Health Services | Medical consultations, hospital services, and prescribed medications. | Critical for maintaining public health and wellbeing. |
| Rental of Residential Accommodation | Monthly rent for apartments or houses, excluding short-term stays like hotels. | Ensures affordability for housing and promotes stability. |
| Certain Financial Services | Banking services such as deposits, withdrawals, and loan interests. | Supports economic stability and access to financial services. |
This table highlights the significance of VAT exemptions on these goods, underlining their role in supporting essential needs and services for the public.
What is VAT?
Value-Added Tax is commonly known as VAT. According to SARS, VAT is an indirect tax on the consumption of goods and services in the economy. Revenue is raised for government by requiring a business, that carries on an enterprise (as defined in section 1(1) of the VAT Act), to register for VAT.
In doing so, the business will charge VAT on supplies of goods and services made by it, on the importation of goods and on imported services (subject to certain conditions). The business will also be entitled to deduct any VAT charged to it, or under limited circumstances from a business that is not registered for VAT, in respect of a supply made to it.
VAT is therefore non-cumulative, meaning that a credit/deduction is allowed for VAT paid in previous stages, within the production and distribution chain. The business is required to pay the difference between the VAT charged by it and the VAT charged to it, or claim a VAT refund where the VAT charged to it exceeds the VAT charged by it.
List of goods and services that are zero-rated
Zero-rated and exempt supplies:
- Exports
- 19 basic food items
- Illuminating paraffin
- Goods which are subject to the fuel levy (petrol and diesel)
- International transport services
- Farming inputs
- grants by government.
Goods and services exempted from VAT are:
- Non-fee related financial services
- Educational services provided by an approved educational institution
- Residential rental accommodation,
- Public road and rail transport.
List of 19 basic food items that are zero-rated for VAT.
According to the South African government, there is no VAT that should be charged on the following list of food items:
- Brown bread.
- Maize meal.
- Samp.
- Mealie rice.
- Rice.
- Vegetables.
- Fruit.
- Vegetable oil.
- Milk.
- Cultured milk.
- Brown wheaten meal.
- Eggs.
- Dried mealies.
- Dried beans.
- Lentils.
- Pilchards/sardinella in tins.
- Milk powder.
- Edible legumes and pulses of leguminous plants.
- Dairy powder blend.