VAT registration in South Africa: the R2.3 million threshold explained

For years the number every South African small business owner watched was R1 million. Cross it and you had to register for VAT. That number has changed. From 1 April 2026, the compulsory VAT registration threshold is R2.3 million, and the voluntary threshold has moved too.

If your business sits anywhere between a side hustle and a few million rand in turnover, this affects how you price, how you invoice, and how much admin you carry.

The short answer

• Compulsory VAT registration: you must register when your taxable supplies exceed R2.3 million in any 12-month period.
• Voluntary VAT registration: you may register once your taxable supplies exceed R120,000 in the past 12 months.
• The VAT rate: 15%.
• The cost: SARS does not charge a fee to register for VAT.
• How: apply to SARS, usually through eFiling, within 21 business days of crossing the compulsory threshold.

What changed on 1 April 2026

	Before 1 April 2026	From 1 April 2026
Compulsory registration	Taxable supplies over R1 million	Taxable supplies over R2.3 million
Voluntary registration	Taxable supplies over R50,000	Taxable supplies over R120,000

The VAT rate itself is unchanged at 15%.

When you must register

You must register as a VAT vendor when the total value of your taxable supplies is more than R2.3 million in any consecutive 12-month period, or when you have a written contract that commits you to exceeding that amount.

Three details catch people out:

• It is a rolling 12 months, not a tax year. The test looks at any twelve consecutive months, so a strong run from July to June counts even though it straddles two tax years.
• It is turnover, not profit. Taxable supplies means what you invoice for goods and services that are subject to VAT, before expenses.
• There is a deadline. Once you cross the threshold you have 21 business days to apply to SARS.

Track your rolling 12-month turnover every month. Finding out in hindsight that you crossed the line months ago is an expensive surprise, because SARS can hold you liable for VAT you never charged your customers.

Does the rule apply to companies and sole proprietors?

Yes. The threshold applies to the business, whatever its form. A sole proprietor, a partnership and a private company all have to register once their taxable supplies cross R2.3 million in a 12-month period.

Compulsory vs voluntary VAT registration

	Compulsory registration	Voluntary registration
Who	Taxable supplies over R2.3 million in 12 months, or a contract committing you to it	Taxable supplies over R120,000 in the past 12 months
Your choice?	No, you must register	Yes, you choose to
Deadline	Apply within 21 business days of crossing the threshold	Apply when you decide to
Obligations once registered	The same: charge VAT, issue tax invoices, submit VAT201 returns, keep records	The same

When you may register voluntarily

If your taxable supplies were more than R120,000 over the past 12 months, you can choose to register even though you are below the compulsory threshold.

Voluntary registration tends to make sense when:

• Your customers are VAT vendors. They claim back the VAT you charge, so your price is effectively the same to them, while you get to claim VAT on your own expenses.
• You have significant VAT-bearing costs. Equipment, stock, software, and rent from VAT vendors all carry input tax you could claim.
• Bigger clients expect it. Some corporates and tenders prefer or require suppliers with a VAT number.

It tends not to make sense when:

• You sell mostly to the public. Consumers cannot claim VAT back, so you either raise prices by 15% or absorb the VAT out of your margin.
• Your costs are mostly salaries. There is no VAT on wages, so there is little input tax to claim.
• You want less admin. Registration means regular VAT returns, strict invoicing rules, and record keeping that must stand up to a SARS review.

How much does VAT registration cost?

SARS does not charge a fee to register for VAT. You can apply yourself.

The real costs come afterwards, and they are worth planning for:

• Accountant or tax practitioner fees, if you ask someone to register for you or to submit your VAT returns.
• Your time, for VAT201 returns, matching invoices to payments, and keeping records that would stand up to a SARS review.
• Cash flow, because VAT you collect from customers belongs to SARS and has to be set aside until you pay it over.

How to register for VAT with SARS

1. Check you qualify. Work out your taxable supplies over the last 12 months, or confirm you have a contract that will take you over R2.3 million.
2. Gather your documents. SARS will generally want proof of who you are and where you operate, your business bank account details, registration documents if you trade as a company, and evidence of your turnover, such as invoices or financial statements.
3. Apply through SARS eFiling. Log in to your eFiling profile and complete the VAT registration application. If you need help, a registered tax practitioner can apply for you.
4. Respond to any SARS requests. SARS may ask for more information or verify your details before it approves the registration.
5. Start charging VAT from your registration date. Update your prices, add 15% VAT to your invoices, and make sure each one meets the tax invoice requirements.

Tip: quoting or pricing with VAT for the first time? Use our free VAT calculator to add or remove 15% VAT from any amount.

What registration commits you to

Once registered, you must:

1. Charge 15% VAT on your taxable supplies.
2. Issue valid tax invoices that meet the SARS requirements.
3. Submit VAT201 returns and pay over the VAT on time, even in periods with no activity.
4. Keep your invoices and supporting records for at least five years.

If you are not registered, you may not charge VAT or issue anything called a tax invoice. Doing so is an offence.

Already registered but now under the threshold?

If you registered because you crossed R1 million and your turnover is below R2.3 million, your registration does not simply fall away. You stay a vendor, with every obligation that comes with it, until SARS deregisters you. Whether to apply for deregistration depends on your customers and costs, and leaving the system can trigger VAT on assets you still hold, so get advice before you decide.

Frequently asked questions

When must a business register for VAT in South Africa?

When its taxable supplies are more than R2.3 million in any consecutive 12-month period, or when it has a written contract that commits it to exceeding that amount. It then has 21 business days to apply to SARS.

What is the VAT registration threshold in South Africa?

From 1 April 2026, the compulsory VAT registration threshold is R2.3 million in taxable supplies over 12 months. The voluntary threshold is R120,000.

How much does it cost to register for VAT?

SARS does not charge a fee to register for VAT. You only pay if you use an accountant or tax practitioner to register for you.

What is the current VAT rate in South Africa?

The standard VAT rate is 15%.

Can a small business register for VAT voluntarily?

Yes, once its taxable supplies over the past 12 months are more than R120,000. It makes most sense when your customers are VAT vendors or you have significant VAT-bearing costs.

Is VAT registration compulsory for a company?

Only once it crosses the threshold. A company, like a sole proprietor or partnership, must register when its taxable supplies exceed R2.3 million in any 12-month period.

What happens if I register late?

SARS can hold you liable for the VAT you should have charged from the date you were required to register, even if you never charged it to your customers. Track your rolling 12-month turnover so you apply on time.

A simple way to stay ahead of it

Whatever side of the threshold you are on, the habit that protects you is the same: know your rolling 12-month turnover. If every invoice you send lives in one place, that number is always one glance away, and VAT is calculated on each invoice instead of at the end of the period.

Eazy-Biz creates your quotes and invoices with VAT calculated for you and keeps your income in one view, so the threshold never sneaks up on you. Start a free trial and put your next invoice through it.