VAT-inclusive pricing
Definition
A VAT-inclusive price already contains value-added tax. A VAT-exclusive price — usually written ex-VAT — does not. The distinction matters because margin is calculated on the ex-VAT figure: the VAT portion was never your money, it is collected on behalf of SARS. To move from an inclusive price to the ex-VAT price, divide by one plus the VAT rate. Mixing the two across a price list, a quote and an invoice is one of the quietest sources of margin error in South African trade, because both numbers look equally plausible on the page.
What it changes in practice.
Food businesses sit on both sides of the line at once: retail and menu prices are quoted inclusive because that is what a customer pays, while supplier price lists and cost calculations are usually ex-VAT. Anyone costing a dish or a delivery has to know which number they are holding.
The failure is rarely a single mistake. It is a price list built on one basis and a margin target read on the other, repeated across every line for as long as nobody checks — which makes it exactly the kind of thing worth catching at the document, not at year-end.
No rate is quoted here on purpose: the standard rate is set by National Treasury and changes by budget, and a number printed in a glossary is a fact with an expiry date. Check the current standard rate with SARS or your accountant before doing the sum.
What it looks like when Finch catches it.
Related terms and reading.
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