Why import VAT is different from ordinary VAT
When you buy goods locally, VAT is charged on the selling price. Import VAT works differently: it is levied by SARS at the port or border, and the base — called the Added Tax Value (ATV) — is calculated under section 13 of the Value Added Tax Act (Act 89 of 1991), as read with the Customs and Excise Act.
A point that trips up almost every first-time importer: South Africa determines the customs value on an FOB basis (Free On Board) — the price of the goods plus the costs of getting them onto the vessel at the export port. Unlike many countries, SA does not use the CIF value, so the international ocean freight and marine insurance are excluded from the customs value.
That is exactly why the ATV formula adds a 10% uplift to the customs value before adding duty. The uplift is a statutory proxy for the freight, insurance and handling that the FOB customs value leaves out. (For goods originating in the BLNS countries — Botswana, Lesotho, Namibia, Eswatini — within the Southern African Customs Union, the 10% uplift is not added.)
VAT rate: 15% — confirmed as the applicable rate for 2026. A proposal to raise it to 15.5% from 1 May 2025 was announced in the February 2025 Budget but reversed by Parliament on 24 April 2025 and does not apply. The rate remains 15%.
The ATV formula explained step by step
Here is the full chain, from supplier invoice to what SARS collects at the port:
| Step | What it is | Formula / note |
|---|---|---|
| 1. Customs value (FOB) | The price paid for the goods plus costs to load them at the export port — excluding ocean freight and insurance | From invoice; convert to ZAR at the SARS rate on date of entry |
| 2. + 10% uplift | Statutory 10% added to the FOB customs value (not applied to BLNS-origin goods) | Customs value × 0.10 |
| 3. + Customs duty | Ad valorem duty from the SARS tariff book (a percentage of the FOB customs value) | Customs value × duty rate |
| 4. = ATV | Added Tax Value — the VAT base | (Customs value × 1.10) + duty amount |
| 5. Import VAT | 15% of ATV | ATV × 0.15 |
Or, factoring out FOB: Import VAT = FOB × (1.10 + duty rate) × 0.15
Worked example 1 — clothing (30% duty)
You import 500 units of cotton T-shirts from Bangladesh. The invoice reads USD 4,500 FOB Chittagong. The SARS rate of exchange on the entry date is R18.50/USD. Tariff heading 6109.10 attracts a 30% ad valorem duty. (Your ocean freight and insurance still get paid — they just don't go into the SARS customs value; the 10% uplift covers them.)
| Component | USD | ZAR (×18.50) |
|---|---|---|
| FOB value = customs value | 4,500.00 | R83,250 |
| + 10% uplift | 8,325 | |
| + Customs duty (30% of R83,250) | 24,975 | |
| = ATV | R116,550 | |
| Import VAT (15% × ATV) | R17,483 | |
| Total SARS charges at port | R42,458 (duty + VAT) |
Key takeaway: The T-shirts cost R83,250 (FOB) but SARS collects R42,458 in duty and VAT before you can take delivery — about 51% on top of the FOB cost. Clothing's 30% duty rate makes it one of the most expensive categories to import into South Africa.
Worked example 2 — machinery (0% duty)
You import an industrial pump from Germany. The FOB customs value works out to R320,000. The tariff heading carries a 0% duty rate (many capital goods and industrial machinery are duty-free to support SA manufacturing).
| Component | ZAR |
|---|---|
| FOB customs value | 320,000 |
| + 10% uplift | 32,000 |
| + Customs duty (0%) | 0 |
| = ATV | 352,000 |
| Import VAT (15% × ATV) | R52,800 |
Even with zero duty, you still pay R52,800 in import VAT. If your business is VAT-registered, you claim this back as an input tax credit on your VAT return — effectively a zero net cost. If you're not VAT-registered, this R52,800 is a hard cash cost.
Worked example 3 — consumer electronics (5% duty)
You import wireless earbuds from China. FOB Shenzhen: USD 8,200. SARS rate: R18.80/USD. Tariff heading 8518.30: 5% duty.
| Component | USD | ZAR (×18.80) |
|---|---|---|
| FOB = customs value | 8,200 | R154,160 |
| + 10% uplift | 15,416 | |
| + Customs duty (5% of R154,160) | 7,708 | |
| = ATV | R177,284 | |
| Import VAT (15% × ATV) | R26,593 | |
| Total SARS charges | R34,301 (duty + VAT) |
Common mistakes importers make with the ATV calculation
South Africa values on an FOB basis, so international freight and marine insurance are not part of the customs value — the 10% uplift already stands in for them. Adding them as well double-counts and overstates your duty and VAT.
Applying 15% to (FOB + duty) without the 10% uplift understates VAT. SARS's formula is (FOB × 1.10 + duty) × 0.15, not (FOB + duty) × 0.15. (The exception is BLNS-origin goods, where the uplift falls away.)
SARS publishes a daily Rate of Exchange (ROE) on sars.gov.za. Your bank's quoted rate and the SARS rate will differ. Always use the SARS ROE published on the date your Bill of Entry is lodged — your clearing agent should confirm this.
Tariff rates change with Budget announcements and trade agreements (SADC, AGOA, EU-SADC EPA etc.). Always verify your HS code's current rate in the SARS Customs Tariff before each shipment.
Reclaiming import VAT — VAT-registered businesses
If your business is registered for VAT with SARS, import VAT is an input tax credit — you claim it back on your next VAT return (VAT 201). You need two documents as proof: the Bill of Entry (SAD 500 or electronic equivalent) and the SARS receipt confirming payment of the import VAT. Keep both in your import file for at least 5 years.
Import VAT is a cash-flow cost even for VAT vendors: you pay at the port and recover it only on the next VAT return date (monthly or bi-monthly depending on your turnover category). On a large shipment this can mean a 1–2 month cash-flow gap. Some importers use a customs VAT deferment facility — speak to a customs broker or SARS for details.
Run the numbers before you order
Our free Duty & VAT Calculator applies the full ATV formula for any HS code — just enter your FOB value, commodity, and origin country.
Open the Duty & VAT Calculator →Frequently asked questions
Is import VAT the same as ordinary VAT?
It's collected by SARS under the same VAT Act and the same 15% rate applies, but the tax base (ATV) is different — it includes the 10% uplift and the customs duty, making it higher than simply applying 15% to the purchase price. VAT-registered businesses recover it as an input tax credit; non-VAT-registered businesses absorb it as a cost.
Does SARS use FOB or CIF for the customs value?
South Africa values imports on an FOB basis — the goods plus the cost of loading them at the export port, but not the international freight or insurance. That is unusual; many countries use CIF. Because freight and insurance are excluded, SARS adds the 10% uplift to the FOB value when working out the VAT base.
What exchange rate must I use for the calculation?
SARS publishes a daily Rate of Exchange (ROE) on sars.gov.za for use in customs valuations. Your clearing agent will use the rate applicable on the date the Bill of Entry is lodged, not the date you placed the order or the date of the invoice. Budget with a conservative (weaker Rand) estimate when quoting customers.
Can I avoid import VAT by under-declaring the value?
No — and attempting to do so is customs fraud. SARS uses transaction value as the primary valuation method (WTO Customs Valuation Agreement) and can cross-check against published import data. Penalties include fines, seizure of goods, and criminal prosecution. Always declare the true FOB transaction value.
What is the difference between customs duty and import VAT?
Customs duty is a tariff — a tax on the goods themselves, set per commodity in the SARS Tariff Book, and it goes to the fiscus. Import VAT is part of the national VAT system; VAT-registered importers recover it. Customs duty is never recoverable — it's a permanent cost even for VAT vendors. That is why a 30% duty rate hurts far more than a 15% VAT rate for most importers.
Does the 10% uplift apply even if my goods have 0% duty?
Yes. The 10% uplift is applied to the customs value regardless of the duty rate (the only exception is goods originating in the BLNS SACU countries). With 0% duty, ATV = customs value × 1.10, and import VAT = ATV × 15%. The duty rate only affects the second addend in the ATV formula, not the uplift.
Are there any imports that are VAT-exempt?
A limited number of goods are zero-rated or exempt from VAT under the VAT Act schedules — primarily certain foodstuffs (basic staples), certain pharmaceutical inputs, and goods under rebate item schedules. Most commercial imports, including machinery, electronics, clothing, and consumer goods, are fully subject to import VAT at 15%.
Related guides
Sources: SARS — How is VAT calculated on imported goods; Value Added Tax Act 89 of 1991, section 13; SARS Customs Tariff. This guide is informational — always verify current duty rates and exchange rates with SARS or a licensed clearing agent. Last updated June 2026.