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Items which are exempt from Value Added Tax (VAT) in South Africa

VAT is widely recognized as an inherently regressive tax, meaning that lower-income households allocate a larger proportion of their earnings to VAT-inclusive goods and services, thereby bearing a disproportionately higher tax burden compared to wealthier households. To counteract this regressivity, South Africa has implemented a system of zero-rated and exempt supplies. This includes a limited range of basic goods and services, notably various staple food items (e.g., brown bread, maize meal, samp, rice, vegetables, milk, eggs), illuminating paraffin (since 2001), exports, international transport services, farming inputs, sales of going concerns, and residential rental accommodation. The government has expressed intentions to further expand the list of VAT-exempt food items as a measure to ease financial pressure on South African households.

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The table below shows key Zero-Rated and Exempt supplies in South Africa.

Category	Examples of Items/Services	Notes
Zero-Rated Basic Foodstuffs	Brown bread, maize meal, samp, mealie rice, dried mealies, dried beans, lentils, pilchards in tins, milk powder, dairy powder blend, rice, vegetables, fruit, vegetable oil, milk, cultured milk, brown wheaten meal, eggs, edible legumes	Introduced in stages from 1991 to 1993 to reduce regressivity
Other Zero-Rated Goods/Services	Exports, illuminating paraffin (since 2001), petrol, diesel, international transport services, farming inputs, sales of going concerns, residential rental accommodation, public road and rail transport	Paraffin exempted in 2001 to assist poor households
Exempt Financial Services	Long-term insurance, interest, provision of credit, exchange of currency, transactions involving letters of credit, equity securities, debt securities, shares, derivatives, cryptocurrency	Exempt due to complexity of taxing financial services and alignment with New Zealand GST system
Exempt Educational Services	Primary, secondary, and tertiary education by State and specified institutions, including incidental goods/services covered by fees	Exempted due to importance of education and administrative burden
Exempt Employee/Non-Resident Services	Services by employee organisations (membership contributions), goods supplied by non-resident non-vendors not entered for home consumption

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