New South African VAT Registration Thresholds (Effective 1 April 2026)
South Africa’s Value-Added Tax (VAT) registration thresholds have officially increased with effect from 1 April 2026. The South African Revenue Service (SARS) is already actively administering all VAT registrations under these new statutory thresholds.
| VAT Registration Category | Old Threshold | New Threshold (From 1 April 2026) |
|---|---|---|
| Compulsory VAT Registration | R1,000,000 | R2,300,000 |
| Voluntary VAT Registration | R50,000 | R120,000 |
1. Compulsory VAT Registration — R2.3 Million
A business is legally required to register for VAT where the total value of its taxable supplies (turnover) exceeds R2.3 million in any consecutive 12-month period, or where it enters into a written contractual agreement that will cause taxable supplies to exceed R2.3 million within 12 months.
2. Voluntary VAT Registration — R120,000
If your business has not reached the compulsory threshold of R2.3 million, you may still choose to apply for voluntary VAT registration once your taxable supplies exceed R120,000 in a 12-month period.
Voluntary registration offers major commercial advantages, especially for B2B enterprises, allowing you to claim back 15% input VAT on operational expenses, capital equipment, and stock, while enhancing commercial credibility with corporate clients and government tenders.
3. Existing VAT Vendors with Turnover Below R2.3 Million
This is critical for existing business owners: If your company is already registered for VAT and your annual turnover is currently below the new compulsory threshold (e.g. R1.5 million), your VAT registration is NOT automatically cancelled.
- Option A (Remain Registered): Continue submitting bi-monthly VAT201 returns, claiming input VAT, and charging 15% VAT on invoices.
- Option B (Apply for Deregistration): You may choose to apply to SARS for voluntary deregistration if administrative overhead outweighs your input tax benefits.
4. Important Caution: Exit VAT on Deregistration
Deregistering from VAT requires careful tax planning. Under Section 8(2) of the VAT Act, when a vendor deregisters, SARS levies Exit VAT (Output Tax) on the lesser of the original cost or the open market value of all assets and trading stock held immediately prior to deregistration on which input VAT was previously claimed.
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