VAT registration in South Africa changed materially from 1 April 2026: the compulsory registration threshold rose from R1 million to R2.3 million in annual taxable supplies, and the voluntary threshold rose from R50,000 to R120,000, the first adjustment to either figure in seventeen years.
What actually changed
A business must register for VAT once its taxable supplies exceed R2.3 million over any consecutive twelve-month period, up sharply from the old R1 million threshold that had stayed fixed for nearly two decades. Businesses below that line can still register voluntarily once they cross R120,000 in taxable supplies, giving smaller, growing businesses more flexibility over timing than before.
Why the threshold moved
The increase, announced in the 2026 National Budget, reflects how far the old R1 million threshold had fallen behind inflation and business growth since it was last set. For many small businesses that were required to register under the old rules purely because of the outdated threshold, the change means VAT registration is now optional rather than compulsory, worth reviewing with an accountant or tax practitioner.
What businesses near the threshold should do
Any business currently VAT-registered because it previously crossed the old R1 million mark should check its actual taxable supplies against the new R2.3 million threshold, since deregistering (where sensible) or remaining registered voluntarily are both legitimate options depending on the business’s specific situation. Registration itself is done through SARS eFiling or in person, and supporting documentation such as bank statements and proof of trading is scrutinised as part of the process.
Frequently asked questions
What is the current compulsory VAT registration threshold in South Africa?
R2.3 million in taxable supplies over any twelve-month period, up from R1 million, effective 1 April 2026.
What is the voluntary VAT registration threshold?
R120,000, increased from R50,000 as part of the same 2026 threshold change.
Why did SARS increase the VAT registration thresholds?
The R1 million threshold had remained unchanged for seventeen years and no longer reflected inflation or typical business growth.
Should a business that registered under the old threshold consider deregistering?
It’s worth reviewing with an accountant or tax practitioner, since deregistering or remaining voluntarily registered are both valid options depending on circumstances.
How does a business register for VAT with SARS?
Through SARS eFiling or in person, with supporting documentation like bank statements and proof of trading required.
VAT registration details via the South African Revenue Service.
Originally published in March 2024. Updated September 2026.
