VAT on Quotations in South Africa
Everything you need to know about Section 65 of the VAT Act and how it affects your business quotations. Stay compliant, avoid penalties.
Important Legal Requirement
Section 65 of the VAT Act makes it a criminal offence to display prices to consumers that exclude VAT. Quotations sent to clients must show VAT-inclusive amounts or clearly display the VAT component.
Must Quotations Include VAT?
Yes. In South Africa, all prices displayed to consumers must include VAT. This includes quotations, price lists, advertisements, and invoices. The current VAT rate is 15% (effective 1 April 2018).
What Section 65 Says
"Any price charged or advertised by a vendor in respect of the supply of any goods or services shall include the VAT chargeable in respect of such supply."
— Section 65, Value-Added Tax Act 89 of 1991
How to Calculate VAT on Quotations
Adding VAT (VAT-exclusive to inclusive)
Price × 1.15 = VAT-inclusive price
Example: R1,000 × 1.15 = R1,150
Extracting VAT (VAT-inclusive to exclusive)
Price ÷ 1.15 = VAT-exclusive price
Example: R1,150 ÷ 1.15 = R1,000
VAT Compliance Checklist for Quotations
Frequently Asked Questions
What if I'm not VAT registered?
If you're not VAT registered (turnover under R1 million), you cannot charge VAT. Your quotations should state "Not VAT registered" and prices are final as quoted.
Can I show VAT separately on my quote?
Yes, you can show the subtotal, VAT amount, and total separately. The key requirement is that the final price the customer pays includes VAT.
What penalties apply for non-compliance?
Contravening Section 65 can result in fines up to R10,000 or imprisonment for up to 12 months. It's classified as a criminal offence under the VAT Act.
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