Change from GST to VAT

History of VAT in South Africa: How the Sales Tax System Evolved

South Africa introduced VAT at a statutory rate of 10% in 1991 to replace general sales tax which had been levied since 3 July 1978. A key feature of VAT is its charge at each stage of production and distribution compared with general sales tax which created a more neutral impact on tax revenues collected, though mildly regressive capture a greater share of poor’s incomes.

VAT was introduced on September 30, 1991, under the Value-Added Tax Act 89 of 1991 (VAT Act) to replace GST. It increases with time over the years and the current VAT rate is 15%, which came into effect on April 1, 2018. VAT, or Value-Added Tax, is a key source of income for the South African government, second only to personal income tax (PIT). In fact, reports suggest that South Africa’s VAT system is one of the most effective, alongside New Zealand’s.

History of Sales Tax in South Africa

General Sales Tax (GST)

No.DateGST rate
13 July 19784%
21 March 19825%
31 September 19826%
41 February 19847%
51 July 198410%
625 March 198512%
History of South African GST Rates

Value Added Tax (VAT)

 The sales tax changed from GST to VAT on 30 September 1991.

No.DateVAT rate
130 September 199110%
27 April 199314%
31 April 201815%
History of South African VAT Rate

South Africa uses a “destination VAT” system, meaning the VAT is applied where the good or service is finally consumed. VAT is typically payable when a business issues an invoice. This applies to everyone except municipalities and small businesses with a turnover under R2.5 million per year, who might have a different payment schedule. You can further study the complete guide by the National Treasury of South Africa on tax history here.

Frequently Asked Questions (FAQs)

Value-added tax (VAT) was first introduced on September 30, 1991 in South Africa.

South Africa’s General Sales Tax (GST) rose in stages, starting at 4% on July 3rd, 1978, and reaching 12% by March 25th, 1985, with increases on March 1st, 1982 (5%), September 1st, 1982 (6%), February 1st, 1984 (7%), and July 1st, 1984 (10%).

South Africa’s income tax journey began in 1914 with the introduction of the Income Tax Act No. 28. 

The VAT rate in South Africa changed on April 1, 2018

The GST in South Africa changed to VAT in 1991. Before it was GST, but now it has been given the name value-added tax (VAT).

IN 2024, there is no such announcement from the government to increase VAT.

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