VAT registration threshold in South Africa (2026 update)

From 1 April 2026, a South African business must register for VAT when its taxable supplies exceed R2.3 million in any consecutive 12-month period (up from R1 million), or when it's reasonably expected to exceed that in the next 12 months. Businesses above R120,000 (up from R50,000) may register voluntarily. The standard VAT rate remains 15%.

The increases were announced in Budget 2026 and SARS confirms the new compulsory threshold on its VAT registration FAQ. Details, including deregistration rules, are on the Budget 2026 FAQ page. This article is general information, not tax advice; speak to your tax practitioner about your situation.

The thresholds at a glance

What counts towards the threshold?

The test is the value of taxable supplies, which includes standard-rated (15%) and zero-rated supplies, but not exempt supplies. In practice:

• Include: sales of goods and services at 15%, zero-rated exports and zero-rated goods.
• Exclude: exempt supplies (for example certain financial services, residential rental and some educational services, depending on the facts), and amounts that aren't supplies at all, such as loans received.

It's a rolling 12-month test, not a tax-year test. Check it every month: add the latest month and drop the oldest.

When you must register

You must apply within 21 business days of the date on which you exceed, or expect to exceed, the compulsory threshold. Two triggers:

1. Retrospective: your taxable supplies in the past 12 months exceeded R2.3 million.
2. Prospective: you have a written contract or commitment that means you'll exceed R2.3 million in the next 12 months.

Late registration doesn't make the VAT go away: SARS can register you from the date you should have registered, and you may owe output VAT on sales you made without charging VAT, plus penalties and interest.

Should you register voluntarily?

Voluntary registration (above R120,000) can make sense when:

• Most of your customers are VAT vendors who can claim the VAT back, so charging VAT doesn't make you more expensive for them.
• You have significant VAT-able expenses or capital purchases and want to claim input tax.
• Your customers expect to deal with VAT-registered suppliers.

It's often less attractive when:

• You sell mainly to consumers who can't claim VAT, so prices effectively rise by 15% or your margin shrinks.
• Your admin capacity is limited: VAT brings returns, invoicing rules and record-keeping obligations.

Already registered but now below R2.3 million?

Deregistration isn't automatic. SARS's Budget 2026 FAQ explains that vendors below the new compulsory threshold may apply to cancel, and that deregistration can trigger VAT on assets and trading stock you keep (so-called exit VAT). Model the cost with your accountant before applying.

What changes in your billing when you register

Registering for VAT affects every invoice you issue:

1. Prices. Decide whether your published prices include VAT. Consumer-facing prices generally need to be VAT-inclusive; B2B price lists often show VAT-exclusive prices. Be explicit.
2. Tax invoices. Your invoices must meet SARS's tax invoice requirements, including the words "Tax Invoice", your VAT number and the VAT amount. See what a valid tax invoice must contain.
3. Existing subscriptions. If you register mid-contract, check whether your contracts let you add VAT to existing prices. Communicate the change in advance.
4. Credit notes. Refunds and adjustments need VAT-compliant credit notes.
5. Records. Keep VAT records for at least five years (longer where other laws apply). See record keeping requirements.
6. Returns. Most small vendors file every two months; your category determines the period.

Selling digital services from outside South Africa?

Foreign suppliers of electronic services to South African customers have their own registration rules, with a separate R1 million threshold. We cover that in VAT on digital services in South Africa.

A monthly threshold check

• Add up taxable supplies (standard and zero-rated) for the last 12 months
• Add any signed contracts for the next 12 months
• If either exceeds R2.3 million, start the registration within 21 business days
• If you're approaching the threshold, prepare pricing and invoicing changes now

How CentraPoint helps

CentraPoint's VAT settings let you switch VAT on for your organisation, choose whether prices are inclusive or exclusive, and apply the right rate per product or plan. Invoices are generated as branded tax invoice PDFs with your VAT number and VAT amounts, and reports show VAT per period for your returns, with sync to Xero, QuickBooks, Zoho Books or Sage. See the invoices docs.

Frequently asked questions

What is the VAT registration threshold in South Africa in 2026?

From 1 April 2026, compulsory registration applies when taxable supplies exceed R2.3 million in any 12-month period. Voluntary registration is possible above R120,000.

Do zero-rated sales count towards the VAT threshold?

Yes. Zero-rated supplies are taxable supplies at 0% and count towards the threshold. Exempt supplies do not.

How long do I have to register for VAT after exceeding the threshold?

You must apply within 21 business days of exceeding, or becoming likely to exceed, the compulsory threshold.

Can I charge VAT before I'm registered?

No. You may only charge VAT and issue tax invoices once you're registered and have a VAT number.