Last reviewed . Next review January 2027.
Internal draft. Match the rate names in the table to the exact names in a live South African Xero file (Accounting, Advanced, Tax rates) before publishing.
Short answer
Use the default tax rate unless you know a line is different. For most South African VAT vendors, that default is the standard rate of 15%. The table below covers the common exceptions. If a transaction isn't listed, ask your accountant before you guess.
This page only helps you choose a rate on an invoice, bill or bank line. Preparing and filing the VAT return is your accountant's job, and it is not covered here.
The four kinds of rate
| Kind | What it means | Xero rate name VERIFY |
|---|---|---|
| Standard rate | VAT at 15% is charged or paid | Standard Rate Sales / Standard Rate Purchases |
| Zero-rated | A VAT supply, but at 0%. Still reported on the VAT return | Zero Rated |
| Exempt | No VAT, and the supply is outside the VAT system | Exempt |
| No VAT | Not a supply at all, or the other party isn't a VAT vendor | No VAT |
Common transactions
| Transaction | Usual rate | Note |
|---|---|---|
| Normal sale of goods or services in South Africa | Standard 15% | The default for most lines |
| Goods exported out of South Africa | Zero-rated | Only with the right export documents. Ask first |
| Some basic foods (for example brown bread, maize meal, fresh fruit and vegetables, eggs, milk) | Zero-rated | Only the items on SARS's list |
| Bill from a supplier that is not VAT-registered | No VAT | Even if their price "looks" VAT-inclusive |
| Bank fees and service charges | Standard 15% | Usually shown on your bank statement |
| Interest earned or paid | Exempt | Keep separate from bank fees |
| Residential rent | Exempt | Commercial rent is usually standard-rated |
| Salaries and wages | No VAT | Payroll is handled by your accountant |
| Payments to SARS (VAT, PAYE, provisional tax) | No VAT | Your accountant sets the account |
| Entertainment, staff refreshments, passenger vehicles | Ask your accountant | VAT on these often can't be claimed |
| Transfers between your own accounts | None | Use Transfer, not Create |
Golden rule
Only claim VAT on a bill if you hold a valid tax invoice showing the supplier's VAT number. No tax invoice, no VAT claim. See entering bills.
If your business is not VAT-registered
You don't charge VAT and you can't claim it. Your accountant will set Xero up so every line defaults to no VAT. If you start seeing 15% on your lines, tell your accountant.