If you’re wondering whether your business needs to register for VAT, there’s important news: from 1 April 2026 the compulsory VAT registration threshold jumped from R1 million to R2.3 million in taxable turnover. That change pulls a lot of growing businesses out of compulsory VAT. Here’s what it means, when you must register, and when registering voluntarily still makes sense. (Always confirm current figures with SARS — thresholds move at Budget time.)
The big 2026 change: compulsory threshold is now R2.3 million
You are required to register for VAT once your taxable turnover exceeds R2.3 million in any rolling 12-month period (up from R1 million). You must also register if you reasonably expect to cross that figure in the next 12 months under a contract. If you’re well below R2.3m, compulsory registration no longer applies — though voluntary registration is still an option.
Compulsory vs voluntary VAT registration
There are two doors into the VAT system:
- Compulsory: taxable turnover over R2.3 million / 12 months.
- Voluntary: you can choose to register once your taxable supplies exceed roughly R120,000 in a 12-month period (verify with SARS), even though you’re not required to.
How to know if your turnover counts
It’s “taxable supplies” that count — broadly, your normal business sales of goods and services, not exempt items or money that isn’t trading income. If your ordinary sales over the past 12 months add up to more than R2.3 million, you’re in compulsory territory. Keep a rolling 12-month view, not just your financial year.
Should you register voluntarily?
Reasons to: if most of your customers are themselves VAT-registered businesses, charging VAT costs them nothing (they claim it back) and you get to claim VAT on your own expenses. It can also make a small business look more established.
Reasons not to: if you sell to ordinary consumers, adding 15% VAT makes you more expensive than non-registered competitors, and VAT brings real admin — returns, records, and SARS deadlines.
VAT vs Turnover Tax — the micro-business alternative
Very small businesses can opt for Turnover Tax, a simplified single tax that replaces several taxes including VAT. Its limit also moved to R2.3 million turnover from 1 April 2026. It trades lower admin for a simpler (sometimes higher) tax calculation — worth comparing if you’re a micro-business.
How to register for VAT on eFiling
VAT registration is done through SARS eFiling (or at a SARS branch). You’ll need your company details, bank account, and proof of trading. Once registered you’ll file VAT returns (usually every two months) and pay over the VAT you’ve collected, less the VAT you’ve paid.
What happens if you should be registered and aren’t
SARS treats failure to register when you’re over the threshold as a serious matter — you can be liable for the VAT you should have charged, plus penalties and interest. If you’re approaching R2.3 million, watch your rolling turnover closely.
Already registered but now below R2.3m?
If you registered when the threshold was R1 million and your turnover is now comfortably under R2.3 million, you may have grounds to deregister. Whether that’s worth doing depends on your customers and expenses — check your position with SARS or a tax practitioner before acting.
Selling products? VAT, pricing and landed cost bite hardest for trading and retail businesses — our Trading, Wholesale & Retail Sector Pack covers exactly that, on top of the company you’ve registered.
