Adding VAT to Income

Handle VAT calculations and reporting for your income correctly.

Overview

If your business is registered for VAT with SARS, you need to:

Charge VAT on applicable supplies
Track VAT collected
Submit VAT returns
Pay output VAT to SARS

ProcessX helps automate these calculations.

VAT Registration Requirements

According to SARS VAT registration rules:

You must register for VAT if:

Your taxable turnover exceeds R1 million in any 12-month period

You may voluntarily register if:

Your turnover exceeds R50,000 in a 12-month period

Setting Up VAT in ProcessX

Step 1: Configure Your Profile

Go to Settings > Company

Toggle VAT Registered to Yes

Enter your VAT registration number

Save your settings

Step 2: Set Default VAT Behavior

Choose your preference:

VAT Inclusive: Amounts you enter include VAT (recommended)
VAT Exclusive: Amounts you enter exclude VAT

Recording VAT on Income

When adding income:

VAT Inclusive (Recommended)

Enter the total amount received (including VAT)

Toggle VAT Inclusive to Yes

ProcessX calculates the split automatically

Example:

Total received: R 11,500.00
VAT (15%): R 1,500.00
Net income: R 10,000.00

VAT Exclusive

Enter the net amount (excluding VAT)

Toggle VAT Inclusive to No

VAT is calculated and added

Example:

Net amount: R 10,000.00
VAT (15%): R 1,500.00
Total: R 11,500.00

VAT Rate

The standard VAT rate in South Africa is 15%.

Some supplies are:

Zero-rated (0%): Basic foodstuffs, exports
Exempt: Financial services, residential rental

ProcessX uses the standard 15% rate. For zero-rated or exempt supplies, consult your accountant. See the SARS guide on VAT rates.

VAT Reports

ProcessX helps with your VAT201 return:

Output VAT (What You Owe)

Total VAT collected on income during the period.

Input VAT (What You Can Claim)

Total VAT paid on business expenses during the period.

Net VAT Position

Output VAT minus Input VAT = Amount payable to SARS (or refundable).

To view your VAT summary:

Go to Reports

Select VAT Summary (if available)

Choose the VAT period

View output and input VAT totals

VAT Periods

Depending on your registration category, you submit VAT returns:

Monthly: Large businesses (Category A)
Bi-monthly: Most businesses (Category B)
6-monthly: Farmers, small businesses (Category C)

Configure your VAT period in Settings for accurate reporting.

Invoice Requirements

Your tax invoices must include:

Your business name and address
Your VAT registration number
Customer details (for invoices over R5,000)
Invoice date and number
Description of goods/services
Total amount including VAT
VAT amount shown separately

Common Scenarios

Received Payment Includes VAT

Most common scenario. Customer pays the VAT-inclusive amount.

Record: Full amount with VAT Inclusive = Yes

Customer Pays VAT Separately

Rare, but sometimes VAT is paid as a separate transaction.

Record: Net income first, then add VAT portion

Export Services (Zero-Rated)

If you export services to foreign clients:

These may be zero-rated
Consult your accountant for proper treatment
Record income without VAT

Learn more about zero-rated supplies on SARS.

Non-VAT Income

Some income may not attract VAT:

Interest received
Dividends
Certain exempt supplies

Record these without VAT selected.

Best Practices

Always record VAT correctly: Incorrect VAT records cause problems

Reconcile monthly: Check VAT totals against your VAT201

Keep tax invoices: Required proof for VAT claims

Submit on time: Avoid penalties for late VAT returns

External Resources

SARS VAT Guide - Official VAT information
VAT Registration - How to register
VAT Returns - Filing your VAT201
SARS eFiling - Submit returns online

Last updated: March 2025