What Is the Difference Between VAT and Income Tax
Yes. Most businesses are registered for both. They are separate tax types with separate requirements.
What Is Income Tax
Income tax is levied on taxable income using progressive brackets for individuals and flat 27% for companies. You pay based on how much you earn.
What Is VAT
VAT is a 15% tax on goods and services. Registered businesses charge it on sales and claim back VAT paid on purchases. The difference is paid to SARS.
Key Differences
Income tax: paid by individuals and companies, calculated annually. VAT: paid by registered businesses, calculated every 2 months. VAT registration is voluntary at R50,000 turnover and compulsory at R1 million.
Frequently Asked Questions
Can I be registered for both?
Yes. Most businesses are registered for both. They are separate tax types with separate requirements.
Do individuals pay VAT?
Individuals pay VAT indirectly when buying goods and services. Only registered businesses charge and collect it.
What is the VAT rate?
The standard rate is 15%. Some items are zero-rated at 0% and some are exempt.
Need Help With Your Tax?
Admin Boss is a registered tax practice with over 20 years of experience helping South African individuals and businesses navigate SARS.