Small business VAT registration became a genuinely different picture from 1 April 2026, when the compulsory registration threshold rose sharply, the first change to VAT thresholds since 2009. Understanding when VAT is compulsory, when it is optional, and what it actually means for your pricing and cash flow matters more than ever with the new figures in place.
This guide covers what you need to know about small business VAT, including when you must register and how it works once you are a vendor.
Can a small business register for VAT?
Any business can register for VAT. From 1 April 2026, registration becomes mandatory once a business earns, or expects to earn, R2.3 million in revenue over a rolling twelve-month period, up sharply from the previous R1 million threshold.
Voluntary registration is also available, and that threshold has risen too: a business earning over R120,000 in the past twelve months can now register voluntarily, up from the previous R50,000 threshold.
Registered micro businesses under the Sixth Schedule of the Income Tax Act can also register for VAT. So while VAT registration is now compulsory for far fewer small businesses than before, it remains available voluntarily to most.
Who must register for VAT in South Africa?
Compulsory VAT registration now applies only once a business earns or expects to earn R2.3 million in revenue over a twelve-month period. Below that threshold, registration is optional rather than required. If your turnover crosses the compulsory threshold, you must apply for registration within 21 business days to avoid penalties and backdated liability.
If your business previously registered for VAT because it exceeded the old R1 million threshold but now sits below R2.3 million, it may be worth checking whether deregistering makes sense for your specific situation.
Can a sole proprietor register for VAT in South Africa?
Yes. Sole proprietors register for VAT under the same requirements as any other business structure. Small business VAT registration is based on income, not on how the business is structured.
How does VAT work for small businesses in South Africa?
Once required, or voluntarily registered, most VAT vendors submit returns and payments bi-monthly, every two months, with larger, higher-turnover vendors filing monthly instead. Returns and payments are generally due by the 25th of the month following each VAT period, with an extended deadline for payments made via eFiling.
As a registered VAT vendor, you charge VAT on goods and services sold to customers, output tax, currently levied at 15%, though certain goods and services are zero-rated or exempt.
Charging VAT makes your products or services more expensive for customers, but it also entitles your business to claim back input tax on goods and services purchased for the business. Claiming this input tax back from SARS effectively reduces the cost of what your business buys, an advantage unregistered businesses cannot access.
What are the three types of VAT supply?
VAT vendors deal with three categories of supply:
- Standard-rated: goods or services where VAT is levied at 15%.
- Zero-rated: supplies where output VAT is levied at 0%, while input VAT on related purchases can still be claimed back against output VAT owed to SARS.
- Exempt: supplies where output tax cannot be levied, and input VAT on related expenses cannot be claimed back either.
What documents are needed to register for VAT?
To register for small business VAT, you typically need:
- A copy of your business’s certificate of incorporation
- A copy of your trust deed and authority letter, where applicable
- A copy of your original ID
- Three months of bank statements
- A letter from your banker, or an original stamped bank statement
- Your latest month’s invoices as proof of trading
- Proof of business address, such as a municipal account or rental agreement
Frequently asked questions
What is the current compulsory VAT registration threshold?
R2.3 million in revenue over a rolling twelve-month period, effective from 1 April 2026, up from the previous R1 million threshold.
What is the voluntary VAT registration threshold?
R120,000 in revenue over the past twelve months, up from the previous R50,000 threshold, also effective from 1 April 2026.
How often do VAT vendors submit returns?
Most vendors file bi-monthly, every two months, though higher-turnover vendors are required to file monthly instead.
Should I deregister if my turnover now falls below the new R2.3 million threshold?
It depends on your specific situation. If you were previously registered under the old R1 million threshold and now sit below R2.3 million, it is worth reviewing whether deregistering, or staying registered voluntarily, better suits your business.
Does registering for VAT make my prices more expensive?
Yes, since you must charge output tax on standard-rated goods and services. It also lets you claim back input tax on business purchases, which can offset some of that cost.
Getting your VAT position right
With the compulsory and voluntary thresholds both raised substantially in 2026, check where your business actually sits before assuming your old VAT status still applies. Getting this right keeps your business compliant without registering, or deregistering, unnecessarily.
Originally published in April 2022. Updated September 2026 to reflect the compulsory and voluntary VAT thresholds that changed on 1 April 2026. Thresholds and rules can change again, so confirm your current position directly with SARS.
