Working with VAT Output Tax

When entering sales orders or sales receipts, you will select the VAT code for the different products or postings. The VAT code you select will determine how VAT is calculated and posted on your VAT return.

To read more about VAT Input Tax (for expenses), click here.

In South Africa there are the following VAT codes for output tax:

Tax Code	Tax Code	Description
0	N/A	VAT NOT APPLICABLE
20	Exempted	VAT Exempted
21	0-rated	0-rated (export)
22	14%	14% Normal Rate Non-Capital Goods
23	14%	14% Capital Goods
24	14% 28+	Supply of Accomodation exceeding 28 days, 60% VAT Discount gives and effective VAT rate of 8.4%
25	14% Acc	14% On Supply of Accomodation NOT exceeding 28 days
26	14% CIU	14% Change In Use
28	14% CR	14% Issued Credit Notes

Tax Codes For Day-To-Day Operations

N/A

The Not Applicable code is usually not used for output tax. The 0-rated or Exempted code is used instead.

0-rated

A few types of goods and services are 0-rated. Consult SARS for details regarding which goods or services are 0-rated. All export sales are 0-rated, if they are direct exports (the goods are sent abroad and you invoice the customer located abroad). The tax basis and tax amount when using this code will be declared in field 2 on your VAT return.

14%

This is the VAT code used for most sales. 14% is the standard VAT rate in South-Africa, which is the normal VAT code for most sales. The tax basis and tax amount when using this code will be declared in field 1A on your VAT return.

14% CR

This VAT code should only be used when Credit Notes are issued. When the credit note is NOT based on an invoice issued in the same tax period, VAT charged (claimed) should be declared in field 18 on the VAT return as an input tax. When the credit note is based on an invoice issued in the same tax period, the normal 14% code should be used on the credit note as well (reducing the amount declared in field 1A).

Tax Codes For Special Situations

Exempted

The exempted code is used for special cases. When you use the exempted code, no VAT will be calculated.

14% CG

This VAT code only should be used on sales of capital goods. An example of capital goods are fixed assets. The tax amount for this code will be declared in field 4A on your VAT return.

14% CiU

This VAT code should only be used when changing the use of your assets. Consult your accountant or SARS before using this tax code. The tax basis for this code will be declared in field 10 and the tax amount in field 11 on your VAT return.

14% Acc

This VAT code is only used by companies that rent out accommodation, where the rental period is less than 28 days. Consult SARS on how to use this tax code. The tax amount for this code will be declared in field 9 in the VAT return, while the tax basis will be declared in field 7.

14% 28+

This VAT code is only used by companies that rent out accommodation, where the rental period exceeds 28 days. When this is the case, you should only charge VAT on 60% of the sale. This is accomplished by the system, simply by charging 8.4% VAT on sales with this VAT code (equal to charging 14% on 60% of the sales). The VAT amount will be declared in field 9 on the VAT return.

There is an important limitation when using this VAT code. The VAT basis declared in field 6 on the VAT return will be wrong, so the VAT basis needs to be recalculated manually. This is done in the following way:

The VAT basis declared in field 6 by the system should be moved to field 5 on the VAT return.
Field 6 should be calculated manually by multiplying the amount in field 5 by 0.6 (60%).