Two prices for the same thing: R1,000 excluding VAT and R1,150 including VAT. They’re identical — the difference is just whether the 15% tax is on top or inside. But mixing the two up is one of the most expensive small mistakes in South African business.
What each term means
- VAT-exclusive (“excl. VAT”, “plus VAT”): the price before tax. VAT gets added on top, so the customer pays 15% more than the quoted figure.
- VAT-inclusive (“incl. VAT”): the total price with tax already inside. The quoted figure is what the customer actually pays.
Businesses that sell to other registered businesses often quote exclusive prices — the buyer wants to see the net figure because they’ll claim the VAT back as input tax. Businesses selling to consumers quote inclusive prices, because that’s what appears on the till slip and on the shelf.
Neither is “wrong” — but a quote that doesn’t say which one it is can become a dispute, and a consumer who’s quoted an exclusive price often doesn’t realise the final bill will be 15% higher.
How to convert between them
At 15%, three formulas cover everything:
| Conversion | Formula | Example |
|---|---|---|
| Add VAT to an exclusive price | Price × 1.15 | R1,000 × 1.15 = R1,150 |
| Remove VAT from an inclusive price | Price ÷ 1.15 | R1,150 ÷ 1.15 = R1,000 |
| Find the VAT inside an inclusive price | Price × 15 ÷ 115 | R1,150 × 15 ÷ 115 = R150 |
The last one is the 15/115 rule — a VAT-inclusive price is 115 parts, of which 15 are tax. It’s how you answer “how much of what I paid is VAT?” without doing any division gymnastics.
If an amount is a mixture — say you only remember that the net was R1,000 and the total was R1,150 — the VAT was R150, always exactly the difference.
Worked example: a service business
A design studio charges a client R4,600 including VAT for a project. What did the studio earn, and what goes to SARS?
- Net (excl. VAT): R4,600 ÷ 1.15 = R4,000
- VAT: R4,600 × 15 ÷ 115 = R600
The studio’s revenue is R4,000; the R600 belongs to SARS and is offset against the input tax the studio claimed on its own purchases in that period’s VAT201. The studio keeps the difference — not the full R600.
What a tax invoice must show
If you’re VAT-registered, your invoice must separate the numbers, not just state a total. SARS requires:
- the VAT amount separately from the price;
- your VAT registration number;
- the rate applied (15%, or a zero-rated note for basic foodstuffs, exports and the other zero-rated items);
- a description, date and unique invoice number, and (above R5,000) the customer’s name and address.
“VAT included” written in the footer is not enough — the VAT portion has to be stated. If it isn’t, a registered client can’t claim the input tax, and that client will ask for a corrected invoice.
Mistakes that cost real money
- Quoting exclusive to a consumer without saying so. The customer expects to pay the quoted figure; the 15% surprise damages trust and can kill the sale.
- Computing VAT as 15% of the inclusive price. The VAT inside a VAT-inclusive price is 15/115 of it — about 13.04% — not 15%. Charging “15% plus VAT” on an inclusive price double-counts the tax.
- Assuming every product carries 15%. Basic foodstuffs such as brown bread, maize meal, samp, rice, dried beans, lentils, tinned sardines, milk, eggs and fresh fruit and vegetables are zero-rated; financial services, residential rent and school fees are exempt. Invoicing them at 15% is wrong in both directions — and overcharging your customers isn’t a VAT problem, it’s a legal one. See what is VAT? for the full categories.
- Forgetting the rate changed. 15% has applied since 1 April 2018 (before that, 14%). Old invoices checked at the wrong rate give wrong answers — the VAT calculator lets you switch rates for exactly this.
- Rounding the wrong way. The VAT portion is rounded to the nearest cent on each line of the invoice; rounding the total first can produce a cent mismatch that flags in an audit.
Why consumers should care
If you’re not VAT-registered, the inclusive price is simply the price. But it’s worth knowing that roughly one in eight rand you spend on standard-rated goods goes to SARS as VAT, and that the R150 in a R1,150 purchase is not profit to the shop — it’s collected and remitted to SARS.
Where to verify
- SARS — Value-Added Tax — the official invoicing and rounding rules in the VAT 404 guide for vendors.
- SARS — Budget 2026 FAQs — confirmation that the 15% rate is unchanged.
Convert any amount in seconds with the VAT calculator, or read how VAT works for the return-and-refund mechanics behind these numbers.