retail accounting
VAT Categories Explained (Standard, Zero, Exempt)
A simple breakdown of how South African VAT rules apply to your products.
## VAT for Shop Owners
South Africa (and many other regions) use a Value Added Tax (VAT) system. Our POS calculates this automatically.
### The Three Categories
1. **Standard Rated (15%)**: Most goods and services.
2. **Zero-Rated (0%)**: Essential goods like basic food items (bread, milk, eggs).
3. **VAT Exempt**: Services not subject to VAT (e.g., certain educational services).
### How it Works in the POS
When you set up a product, you assign a VAT Category. When a sale is made:
- The system calculates the VAT portion.
- This is logged and summed in the Accounting Dashboard.
### Example
If you sell a product for **R100** at 15% VAT:
- The VAT component is **R13.04** (100 / 1.15 * 0.15).
- This **R13.04** is your liability to pay to SARS.
> Always consult a tax professional for specific advice.
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Last updated January 2026