Which goods and services are VAT exempt in South Africa?

VAT exempt goods and services in South Africa are listed in **Section 12 of the VAT Act** and include specific categories where no VAT is charged and no input VAT can be claimed. ## Financial Services **Financial services** are the largest category of VAT exempt supplies, including: - Banking services (account fees, transaction charges) - Insurance premiums and claims handling - Investment management services - Credit and loan services - Foreign exchange services - Pension fund administration ## Educational Services **Educational services** provided by approved institutions are exempt: - Tuition fees at registered schools and universities - Educational courses by accredited training providers - Childcare services at registered facilities - Educational materials directly supplied by schools ## Healthcare and Medical Services **Medical and healthcare services** include: - Professional medical, dental, and veterinary services - Hospital and clinic services - Therapeutic services by registered practitioners - Medical aid scheme benefits ## Residential Accommodation **Long-term residential accommodation** is exempt when: - Lease agreements exceed **47 days** - Residential property rentals - Sectional title levies for residential units ## Postal and Transport Services - **Postage stamps** and postal services - Public passenger transport services - International transport services (also zero-rated) ## Religious and Welfare Services - Religious services and donations - Welfare services by approved organisations - Charitable activities by registered charities ## Key Differences: Exempt vs Zero-Rated **Exempt supplies** mean: - No VAT charged to customers - **No input VAT** can be claimed on related expenses - Vendors cannot register for VAT if they only make exempt supplies **Zero-rated supplies** mean: - No VAT charged to customers - **Full input VAT** can be claimed on related expenses - Vendors can register for VAT ## VAT Registration Impact Businesses making only exempt supplies: - Cannot register for VAT voluntarily - Cannot claim input VAT on expenses - Must monitor the **R1 million threshold** for mixed supplies For accounting practices managing VAT compliance, WeekdayApp automatically tracks exempt vs taxable supplies and calculates input VAT apportionment, starting at R199/user/month. ## Practical Tip Keep detailed records of exempt supplies as SARS may require proof that supplies qualify for exemption. Mixed suppliers must apportion input VAT between taxable and exempt activities using approved methods.