Blog · South Africa and the UK
VAT on purchase orders in South Africa
Quote each line on a South African purchase order excluding VAT, add VAT at the standard rate of 15%, and show the total including VAT at the bottom. If your organisation is registered for VAT, print your VAT registration number on the order. The PO is not a tax document: the supplier’s tax invoice is, and SARS sets what that must contain. Confirm anything specific to your organisation with your accountant or SARS.
Lines and limits excluding VAT, total including it
Most South African businesses price and compare purchases excluding VAT. For a VAT vendor that is the figure that hits the budget, because the VAT is claimed back. So each PO line shows the quantity, the unit price and the line amount before VAT.
Below the lines, the order shows three figures: the net total, the VAT at 15%, and the total including VAT. The supplier sees exactly what they will invoice, and the person approving sees the cost that matters.
Approval limits usually follow the same rule. A manager with a limit of R25,000 can approve a request whose total excluding VAT is up to R25,000, even if the amount including VAT is higher. Write that down in your purchasing policy so nobody has to guess.
A worked example
A school orders chairs and toner from a supplier that is a VAT vendor. The supplier quoted excluding VAT, and the school adds VAT at 15% on each line.
| Line | Net (excl. VAT) | VAT at 15% | Total (incl. VAT) |
|---|---|---|---|
| 6 office chairs at R1,450.00 | R8,700.00 | R1,305.00 | R10,005.00 |
| 4 toner cartridges at R895.00 | R3,580.00 | R537.00 | R4,117.00 |
| Delivery | R450.00 | R67.50 | R517.50 |
| Order total | R12,730.00 | R1,909.50 | R14,639.50 |
Your VAT number on the PO when you are a vendor
If your organisation is a registered VAT vendor, put your VAT registration number on every purchase order, next to your legal name and address. The supplier copies those details onto the tax invoice. A vendor generally needs a valid tax invoice, made out correctly, to claim the VAT back as input tax, so a wrong name or a missing number can become a problem at month end.
Groups with more than one company need care here. Each legal entity has its own registration, and an order must carry the details of the entity that is actually buying. An invoice addressed to the wrong company in the group is a common reason to send it back.
If you are not registered for VAT
Many schools, NPOs and small businesses are not VAT vendors. They pay VAT on purchases like everyone else but cannot claim it back, so for them the VAT is a real cost.
- Leave the VAT number off. Never borrow one from a related body, a parent organisation or an old supplier form.
- Still show net, VAT and total, so the order matches what the supplier will charge.
- Budget on the total including VAT, because that is what leaves the bank account. Some non-vendors set their approval limits on the total including VAT for the same reason. Pick one rule and state it.
- Give the supplier your full legal name and address, so the invoice is addressed to the right body. See how this works for schools and charities.
The PO is not a tax invoice
A purchase order is the buyer’s document. It says what you agreed to buy, at what price, and who approved it. The tax invoice is the supplier’s document, issued when they supply. SARS sets the details a tax invoice must contain, and it is the tax invoice, not your PO, that supports a claim for input tax.
So don’t file a PO as proof of VAT paid, and don’t ask a supplier to treat your PO as their invoice. Compare the two when the invoice arrives: same lines, same prices, same VAT. For more on the difference, read purchase order vs invoice.
When a quote is silent on VAT
A quote that just says “R18,000” could mean R18,000 plus VAT or R18,000 including VAT. That is a difference of R2,700, enough to push a request over someone’s limit. Before it goes on a PO, check:
- Is the supplier a VAT vendor? Ask for their VAT number. If they are not registered, they will not charge VAT, and the PO should show none.
- Is the price inclusive or exclusive? Ask them to confirm in writing, on the quote or in an email you attach to the request.
- Does every line carry VAT? Some supplies are zero-rated or exempt. The supplier will know which of theirs are; ask them to mark those lines.
- Do the sums agree? Recalculate VAT on the net and compare it with any total the supplier gave. Small rounding differences are normal; bigger ones mean a line is treated differently.
Check the details with your accountant
This article describes how VAT commonly appears on purchase orders in South Africa. It is not tax advice. Whether you must register, which supplies carry VAT, and what your invoices need to show depend on your organisation, so confirm them with your accountant or with SARS.
The South African pages for construction, hospitality and property show how buyers in those fields set up approvals and orders.
Questions
Should a purchase order include VAT in South Africa?
Yes, usually as a separate figure. Show each line excluding VAT, then the net total, the VAT at 15% and the total including VAT, so the order matches the supplier’s tax invoice.
Do I need my VAT number on a purchase order?
If your organisation is a VAT vendor, put it on, with your legal name and address, so the supplier can address the tax invoice correctly. If you are not registered, leave it off.
Can I claim VAT back using a purchase order?
No. A vendor generally needs the supplier’s valid tax invoice to claim input tax. The purchase order records what you agreed to buy; confirm the documentary rules with your accountant or SARS.
Are approval limits set before or after VAT?
Most VAT vendors set them excluding VAT, because that is the cost to the budget. Organisations that cannot claim VAT back sometimes use the total including VAT instead. Either works if the policy says which.