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VAT for freelancers and small businesses

A plain-language overview of the VAT rules that matter most when you work for yourself or run a small business in South Africa.

By Word2Mouse · Updated · Sources checked 10 October 2026 · Not tax advice

This guide summarises SARS's published rules for small operators. It is general information, not tax advice. Your situation may have details that change the answer, so check the linked SARS pages or speak to a registered tax practitioner.

1. Do you need to register?

From 1 April 2026, you must register for VAT if the value of your taxable supplies in any consecutive 12-month period exceeds, or is likely to exceed, R2.3 million. You may register voluntarily, under certain circumstances, once your taxable supplies have exceeded R120 000 in the past 12 months (SARS: Register for VAT (opens in new tab); SARS: Budget 2026 FAQs (opens in new tab)). The full detail is in our VAT registration threshold guide.

As a freelancer, note that SARS treats an employee earning a salary or wage as not carrying on an enterprise, but an independent contractor can be. Hobbies and occasional private sales are not an enterprise either.

2. Charging VAT once you are registered

A registered vendor charges VAT on its taxable supplies (output tax) at the standard rate of 15%, or at 0% where a supply is zero-rated (SARS: Value-Added Tax (opens in new tab)). The VAT 404 Guide for Vendors (opens in new tab) states that all prices charged, advertised or quoted by a vendor must include VAT.

Example: you agree a fee of R20 000 excluding VAT for a project. You invoice R20 000 plus R3 000.00 VAT, a total of R23 000.00. If you instead quoted R20 000 including VAT, the VAT is inside that figure and your fee is smaller; see the reverse VAT guide. The SA VAT Calculator does both directions instantly.

If you are not registered, you must not charge VAT.

3. Tax invoices

VAT 404 explains the types of tax invoice:

  • if the consideration is more than R5 000 (including VAT), a full tax invoice must be issued;
  • if it is less than R5 000, an abridged tax invoice may be issued, except for zero-rated supplies;
  • if it is less than R50, a tax invoice does not have to be issued.

The guide lists the particulars each type must show. Your customers who are vendors need a valid tax invoice to claim input tax, so getting this right matters to them.

4. Claiming input tax

You can deduct VAT charged to you (input tax) when it is incurred for making taxable supplies, which is the main financial benefit of registration. VAT 404 sets out important limits:

  • no deduction for VAT on goods or services acquired for exempt supplies, private use or other non-taxable purposes;
  • as a general rule, no deduction for VAT on acquiring a motor car, or on goods or services acquired for entertainment, even if used for taxable supplies; and
  • you must hold the documentary proof SARS requires, such as a valid tax invoice, before claiming.

VAT 404 also limits claims for input tax and other deductions to a period of five years.

5. Tax periods and VAT201 returns

You report on a VAT201 return at the end of every tax period. According to VAT 404:

  • the standard tax period is two-monthly: Category A periods end in January, March, May, July, September and November, and Category B periods end in February, April, June, August, October and December;
  • monthly periods (Category C) apply when turnover exceeds or is likely to exceed R30 million in any consecutive 12 months;
  • the return and payment are normally due by the 25th day of the month after the tax period ends, and vendors who file electronically have until the last business day of that month.

Your output tax less your input tax and other permissible deductions is the VAT payable, or refundable if input tax is higher.

6. Late payment and records

VAT 404 states that late payments of VAT attract a penalty of 10% of the outstanding tax, plus interest at the prescribed rate. Keep your documentary proof and other records of transactions for at least five years.

7. A simple routine

  1. Track your rolling 12-month taxable turnover monthly, so you know before you cross R2.3 million.
  2. Once registered, add 15% VAT to every standard-rated invoice and make sure excl., VAT and total add up to the cent.
  3. Issue the correct type of tax invoice and keep copies.
  4. Keep supplier tax invoices for every input tax claim, and leave out entertainment and other disallowed costs.
  5. Diarise your VAT201 deadlines and pay on time.

8. Common questions

I sell to clients overseas. Do I charge VAT?

Exports of goods can be zero-rated under certain conditions, and VAT 404 also lists certain services, such as services physically performed outside South Africa, among the zero-rated supplies. The rules and documentary requirements are detailed; see our zero-rated vs exempt guide and VAT 404.

My turnover dropped below the new threshold. Can I deregister?

SARS's Budget 2026 FAQs say vendors below the new compulsory threshold may apply to deregister, but exit VAT may be due on goods and assets you keep. Get advice first.

Note: VAT 404 Issue 15 was published before the 2026 threshold change, so where it mentions R1 million or R50 000, the 2026 figures above apply instead.

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Sources

All checked on 10 October 2026.