Understanding the new VAT registration threshold in South Africa

Published Monday 14 September 2026

Table of contents

• What is VAT registration in South Africa?
• What are the new VAT thresholds effective in 2026?
• Who must register for VAT?
• Who can register voluntarily?
• How to register for VAT: Step by step
• Documents you need for VAT registration
• How long does VAT registration take?
• What happens after you register?
• Can you deregister if you're under the new thresholds?
• Simplify VAT compliance with Xero
• FAQs on VAT registration in South Africa

Key takeaways

• From 1 April 2026, the compulsory VAT registration threshold in South Africa increased from R1 million to R2.3 million in taxable supplies over any 12-month period, while the voluntary threshold rose from R50,000 to R120,000.
• If your taxable supplies (sales of taxable supplies or services) exceed R2.3 million, you must apply for VAT registration with SARS within 21 business days or risk penalties.
• Businesses that previously had to register but now fall below R2.3 million can apply to deregister, though the process takes 18 to 24 months.
• You can register for VAT through SARS eFiling or by booking a virtual, phone, or in-person appointment at your nearest SARS branch.

What is VAT registration in South Africa?

When you register for Value-added tax (VAT), you become a recognised VAT vendor with the South African Revenue Service (SARS), which means you're authorised to charge, collect, and remit this tax. VAT is a consumption tax of 15% that's added to most goods and services sold in South Africa.

VAT registration in South Africa works on two sides.

• Output VAT is the 15% you charge your customers on the goods or services you sell.
• Input VAT is the 15% you pay when you buy goods or services for your business.

As a registered vendor, you'll collect output VAT from your customers and pay it to SARS, but you can claim back the input VAT you've paid on legitimate business expenses. You only owe SARS the difference between the two.

For small businesses, this means VAT registration isn't just a compliance obligation. It can also reduce your costs if you're spending significantly on VAT-inclusive business inputs – that's why some business owners register voluntarily, even though they're under the threshold for compulsory registration.

What are the new VAT thresholds effective in 2026?

South Africa's VAT registration thresholds changed on 1 April 2026, marking the first adjustment in over a decade. Here's what shifted:

• Compulsory registration threshold: increased from R1 million to R2.3 million in taxable supplies over any consecutive 12-month period
• Voluntary registration threshold: increased from R50,000 to R120,000 in taxable supplies over any consecutive 12-month period

The changes aim to reduce the compliance burden on small and medium enterprises. Many businesses that were required to register under the old R1 million threshold no longer need to, freeing them from the administrative demands of filing VAT returns. The updated thresholds also better reflect inflation, since the previous figures hadn't been adjusted since they were originally set.

What the new thresholds mean for your business

If your annual taxable supplies fall between R1 million and R2.3 million, you're no longer required to be VAT-registered. You can choose to stay registered or apply to deregister. If your supplies are between R120,000 and R2.3 million, you now qualify for voluntary registration, which could benefit you if your business has significant VAT-inclusive expenses.

Businesses earning above R2.3 million still face the same obligation: you must register and remain compliant.

Who must register for VAT?

Any person or entity making taxable supplies that exceed R2.3 million in any consecutive 12-month period must register for VAT with SARS. This obligation applies to individuals, companies, partnerships, trusts, municipalities, and associations.

You must apply within 21 business days of exceeding the threshold. Failing to register on time can result in penalties and interest from SARS, so it's worth tracking your revenue closely as you approach the threshold.

The 12-month period isn't tied to a financial year. SARS looks at any rolling 12-month window, which means you need to monitor your cumulative taxable turnover on an ongoing basis.

What counts as taxable supplies?

Taxable supplies include most goods and services sold in South Africa that attract VAT at the standard rate of 15% or the zero rate of 0%. This covers products you sell, services you render, and certain imported services.

Some supplies are exempt from VAT and don't count towards the threshold. These include:

• financial services: loans, interest, and life insurance premiums are exempt, but administrative fees charged by banks and financial institutions are not exempt
• residential rental accommodation: long-term rental of a dwelling used for residential purposes
• educational services: tuition fees charged by approved educational institutions
• public transport: certain passenger transport services by road or rail

If you're unsure whether your supplies are taxable, it's a good idea to speak with a tax professional or check the SARS VAT vendor FAQ page.

Who can register voluntarily?

If your taxable supplies fall between R120,000 and R2.3 million in a 12-month period, you can choose to register voluntarily. If you want to register but have only been making sales for one to 11 months, you'll need to demonstrate that you're making taxable supplies of at least R4,200 per month on average. If you only have a month of sales, you must have exceeded R4,200 for that month.

Voluntary registration is optional, but it's not a decision to take lightly. There are clear benefits and drawbacks depending on your business situation.

Should you register voluntarily?

Voluntary registration can make sense for growing businesses, but it comes with trade-offs. Consider these factors before you decide:

• You can claim input VAT. If you buy a lot of VAT-inclusive stock, equipment, or services, registration lets you claim that VAT back from SARS. This can improve your cash flow.
• You may appear more established. Some larger clients and suppliers prefer working with VAT-registered vendors, as it signals a certain level of business activity.
• You'll need to charge 15% VAT. Your prices effectively increase for customers who aren't VAT-registered themselves, which could affect competitiveness if you sell directly to consumers.
• You'll have filing obligations. Registered vendors must submit VAT returns to SARS every two months (or monthly, depending on turnover) and keep detailed records.

If your business expenses carry significant VAT and your customers can claim input VAT themselves, voluntary registration often makes financial sense. If most of your customers are everyday consumers, the added 15% could push them towards cheaper alternatives.

How to register for VAT: Step by step

The most common way to register for VAT is through SARS eFiling. You'll need to be registered as an eFiling user before you start. Here's how the process works:

1. Log in to your SARS eFiling account at www.sarsefiling.co.za.
2. Select "Home" and find "SARS Registered Details" from the left navigation menu.
3. Select "Maintain SARS Registered Details" and confirm that you're authorised to make the change.
4. Click "Revenue" from the left-hand menu and then select "Value-Added Tax" from the list of available tax types.
5. Click "Register" to begin the VAT registration application.
6. Complete the online version of the VAT101 registration form with your business details, banking information, and estimated turnover.
7. Upload all required supporting documents (see the next section for a full list).
8. Review your application carefully and submit it electronically.
9. Save or print your acknowledgement receipt for your records.

Tax practitioners who are handling VAT registration for their clients will use a similar but slightly different process.

SARS will review your application and may request additional documentation or schedule a verification visit. You'll receive your VAT registration number once the application is approved.

Registering via virtual or telephonic appointments

If you prefer not to use eFiling, you can book a virtual or telephonic appointment with SARS. Visit the SARS website to schedule a video or voice call with a SARS agent who'll guide you through the registration process. You'll still need all the same supporting documents, so prepare them in advance.

Virtual appointments can be a good option if you're registering for the first time and want real-time assistance, or if you've run into issues with the eFiling portal.

Documents you need for VAT registration

Before you start your application, gather everything you'll need. Missing documents are one of the most common reasons for registration delays. You'll typically need:

• CIPC registration certificate: your company's registration certificate from the Companies and Intellectual Property Commission (for companies and close corporations)
• certified copy of your ID: a certified copy of the identity document for all directors, members, or trustees.
• proof of business address: a recent utility bill, lease agreement, or municipal account confirming your trading address
• proof of residential address: a recent utility bill or bank statement for each representative (not older than three months)
• bank account confirmation letter: an original letter from your bank confirming the business account details.
• bank statements: three months of business bank statements showing trading activity
• completed VAT101 form: the SARS VAT registration form, filled in accurately with all required fields.

If you're a sole proprietor, you may also need to provide proof of trading activity, such as invoices, contracts, or purchase orders. SARS uses these to verify that your business is genuinely active.

You can upload the supporting documents in the eFiling system or use SARS walk-in services, with an appointment, but in either case, you must provide the documents within 21 days of your VAT registration application.

How long does VAT registration take?

SARS introduced an enhanced VAT registration process in December 2025, designed to speed up applications and reduce fraud. Under this improved process, straightforward applications can be processed within 10 to 21 business days.

However, several factors can delay your registration, including:

• incomplete documentation: missing or incorrect supporting documents
• verification visits: in-person visits from SARS to confirm your business address and trading activity,
• high application volumes: peak periods, particularly around the start of a new financial year, when more businesses are registering than usual
• queries from SARS: if SARS needs clarification on any part of your application

These delays can add weeks or even months to processing. To keep things moving, double-check your documents before submitting and respond to any SARS queries promptly. You can track your application status through eFiling.

What happens after you register?

Once SARS approves your application, you'll receive a VAT registration number and an effective date of registration. From that date, you're required to do the following:

• Charge VAT on sales. Add 15% VAT to all taxable goods and services you supply.
• Issue proper tax invoices. Every invoice must include your VAT number, the amount of VAT charged, and the total amount.
• Keep detailed records. Retain all tax invoices, receipts, and financial records for five years.
• File VAT returns. Submit your returns to SARS by the due date each period.

VAT returns and filing deadlines

Most small businesses file VAT returns every two months, based on the tax periods assigned by SARS. Businesses with annual taxable supplies exceeding R30 million must file monthly.

Your VAT return is due by the 25th of the month following the end of each tax period. For example, if your tax period covers January and February, your return and payment are due by 25 March. Late submissions attract penalties and interest, so it's worth setting up reminders and automated tracking to stay on top of deadlines.

Can you deregister if you're under the new thresholds?

If your business previously had to register because your taxable supplies exceeded R1 million, but you now fall below the new R2.3 million threshold, you can apply for deregistration. This is particularly relevant for businesses turning over between R1 million and R2.3 million.

Keep in mind that deregistration isn't instant. The process typically takes 18 to 24 months, as SARS needs to verify your records and ensure all outstanding returns and payments are settled. During this period, you must continue charging VAT, filing returns, and meeting all your vendor obligations.

There's also a tax implication to consider. Under Section 8(2) of the VAT Act, when you deregister, SARS treats your remaining business assets as a deemed supply. This means you must pay output VAT based on the lesser of the market value or cost of the assets you held at the time of deregistration, including equipment, stock, and other business property. You'll pay that "exit" VAT with your final return.

Before applying to deregister, weigh the administrative relief against the potential tax cost. If you'll have to pay a lot of exit VAT or if your input VAT claims are substantial, staying registered might still work in your favour.

Simplify VAT compliance with Xero

Managing VAT doesn't have to mean drowning in spreadsheets and manual calculations. Xero's cloud accounting software can help you stay on top of VAT by calculating VAT on your transactions, preparing VAT returns, and connecting to your bank accounts for reconciliation.

With Xero, you can track your taxable supplies as they grow, so you can see where you stand relative to the registration threshold. Automated bank feeds pull in transactions daily, and Xero's reporting tools can help give you visibility into your output and input VAT throughout the month.

Whether you're newly registered, voluntarily registered, or considering deregistration, having your finances organised in one place makes compliance far less stressful.

Ready to take the admin out of VAT? Get one month free and see how Xero can simplify your financial management.

FAQs on VAT registration in South Africa

Here are answers to some common questions about VAT registration in South Africa.

How much does VAT registration cost?

Registering for VAT with SARS is free, with no application fee for eFiling or virtual appointments. Your only potential cost is hiring a tax practitioner to help with the application.

Can a sole proprietor or trader register for VAT?

Yes. Sole proprietors (sole traders) can register for VAT. You must register if taxable supplies exceed R2.3 million, but you can register voluntarily if taxable supplies exceed R120,000 but are under R2.3 million. You'll register using your personal details and ID number rather than a company registration number.

What is the VAT rate in South Africa?

The standard VAT rate in South Africa is 15%, applying to most goods and services. Certain items, such as basic foodstuffs and fuel levy goods, are zero-rated at 0%.

What happens if you don't register when required?

If your taxable supplies exceed R2.3 million in 12 months and you don't register within 21 business days, SARS can register you compulsorily and backdate your registration. You'll be liable for VAT on all taxable supplies made from the date you should have registered, whether you collected the tax or not, plus penalties and interest on any unpaid amounts.

What's the difference between VAT and turnover tax?

VAT is a multi-stage consumption tax applied at each point in the supply chain, where registered vendors can claim back input VAT on business purchases. Turnover tax is a simplified alternative for micro-businesses with an annual turnover of R2.3 million or less; it replaces VAT, income tax, capital gains tax, and dividends tax with a single lower-rate payment. But in exchange for the lower rate, you can't claim business deductions; you just pay tax based on your turnover (revenue).