VAT changes how a contractor prices, quotes and invoices. This guide covers when registration is compulsory, how to work with the 15% rate, and what SARS requires on a tax invoice. It is a practical summary, not tax advice: talk to your accountant or tax practitioner about your own position.
The rate
SARS charges VAT on taxable supplies at the standard rate, currently 15%, or at the zero rate. A limited range of goods and services is zero-rated or exempt.
When registration is compulsory
SARS has announced that from 1 April 2026 the compulsory VAT registration threshold increased from R1 million to R2.3 million. A contractor whose taxable turnover goes over the threshold must register; below it, registration is not compulsory. Strictly, the law hasn’t caught up yet: SARS’s Budget 2026 FAQ says that “although the amendments have not yet been promulgated, the Minister of Finance announced these amendments to be effective from 1 April 2026”, and SARS is handling new registrations on the R2.3 million threshold from that date. Check the exact test with SARS or your tax practitioner.
BouWise reflects this: VAT is off by default on quotes, because most small contractors are under the threshold, and you switch it on in settings once you are registered.
Adding and removing VAT
- To add VAT to a price: price incl. VAT = price excl. VAT × 1.15.
- To find the VAT in an inclusive price: VAT = inclusive price × 15 ÷ 115.
- To remove VAT: price excl. VAT = inclusive price ÷ 1.15.
A common mistake is taking 15% off an inclusive price, which removes too much: 15% of an inclusive amount is more than the VAT in it. The VAT calculator does all three sums.
A worked example
A job priced at R10,000 before VAT is R11,500 including VAT, and the VAT in it is R1,500. Working backwards from R11,500: 11,500 × 15 ÷ 115 = R1,500 VAT, and 11,500 ÷ 1.15 = R10,000. Taking 15% off R11,500 would give R9,775, which is wrong by R225.
What a tax invoice must show
SARS’s checklist for VAT invoices sets out two levels. A full tax invoice is required where the supply, including VAT, exceeds R5,000. It must meet all seven criteria:
- the words “Tax Invoice”, “VAT Invoice” or “Invoice”;
- the supplier’s name, address and VAT registration number;
- the recipient’s name and address, and their VAT registration number where the recipient is a vendor;
- a serial number and the date of issue;
- an accurate description of the goods or services (and whether goods are second-hand);
- the quantity or volume supplied; and
- the value of the supply, the amount of tax charged and the consideration (value and tax).
An abridged tax invoice is allowed where the supply, including VAT, is more than R50 and less than R5,000. It must meet five criteria: the words, the supplier’s name, address and VAT number, the serial number and date, an accurate description, and the value, tax and consideration. The recipient’s details aren’t required.
How BouWise helps
- Once you switch VAT on and enter your VAT number, invoices are titled “Tax Invoice” and show the VAT separately.
- The quote screen reminds you if your VAT number is missing, or if an invoice over R5,000 lacks the client’s name and address.
- Clients who are VAT vendors can have their VAT number added to the job.
- If you are not VAT registered, quotes and invoices show no VAT at all. Don’t charge VAT if you aren’t registered.
Pricing when you register
Registering part-way through a relationship with a client changes your prices. Either the price stays the same and you absorb the VAT in it, or the price goes up by 15%. Decide which before you send the next quote, and tell regular clients in advance. See writing a quote and setting your day rate.
This guide is general information for estimating. It is not engineering, legal or tax advice. Check SANS 10400 (the National Building Regulations) and your local municipality’s building control officer for your project.