When Does Your Business Need to Register for VAT?

The compulsory VAT threshold

In South Africa, your business is legally required to register for VAT once your taxable turnover exceeds R2.3 million in any consecutive 12-month period. This threshold was increased from R1 million to R2.3 million with effect from 1 April 2026 as part of Budget 2026.

This includes income from the sale of goods, services, or any other taxable supply. The moment you cross this threshold — or are certain you will — you must register with SARS. Failing to do so within 21 business days of becoming liable is a SARS offence.

Voluntary VAT registration

You can register voluntarily if your taxable turnover exceeds R120 000 in the past 12 months or you can reasonably demonstrate it will reach that level. The voluntary registration threshold was also increased from R50 000 to R120 000 with effect from 1 April 2026. Voluntary registration makes sense when:

Most of your clients are VAT-registered businesses (you can recover input VAT on purchases)
You make significant purchases on which you want to claim input VAT back
Registration improves your credibility with larger corporate clients who require a VAT number

When voluntary registration does NOT make sense

Your clients are primarily end consumers who cannot recover VAT — your prices effectively go up by 15%
Your profit margins are thin and the admin burden outweighs the input VAT recovery
You are in an exempt sector (residential rentals, childcare, financial services)

The VAT registration process

Register on SARS eFiling (if not already registered)
Complete the VAT101 application form on eFiling
Submit supporting documents: ID, proof of banking, proof of business address, business registration documents (if a company/CC)
SARS may request an inspection visit for new businesses
Once approved, you receive your VAT registration number and effective date

Turnaround is typically 7–21 business days, though SARS workload varies.

What happens after registration

Once registered, you must:

Charge 15% VAT on all standard-rated supplies
Submit VAT201 returns — monthly (if turnover > R30 million) or bi-monthly
Pay VAT to SARS by the 25th of the month following the end of your tax period
Keep VAT invoices for all purchases and sales — these are the basis for your input and output VAT claims

The most common VAT mistakes

Charging VAT before registration is confirmed — this is illegal and can result in penalties
Missing a return — VAT is one of the strictest SARS compliance areas; late submission triggers immediate interest
Claiming input VAT without a valid tax invoice — SARS requires a properly formatted invoice with the supplier's VAT number, date, and description

How we can help

We manage the entire VAT registration process and ongoing VAT compliance — returns, payments, reconciliations, and correspondence with SARS. If you are approaching the R2.3 million compulsory threshold, currently registered below R2.3 million and wondering whether to remain registered, or want to understand whether voluntary registration makes sense for your business, contact us.