1.2 Value Added Tax (VAT)

This is an indirect tax on the consumption of goods and services in the economy

• Revenue is raised for government by requiring certain businesses to register and to charge VAT on the supply of goods and services.
• VAT is presently levied at the standard rate of 15% on the supply of most goods and services and on the importation of goods.
• There is a limited range of goods and services which are subject to VAT at the zero rate
• For example: Mr. Smit bought goods for his shop and he paid a total of R12 345,67. If all the goods included VAT, how much was the cost  excluding VAT the answer would be
  R12 345,67 ÷ 115% = R10735,37

Activity 1.2

Watch the video below that explains what VAT is and how works. Please click on each note to reveal an activity to complete.