When Must a Small Business Register for VAT in South Africa?

Quick answer: You must register for VAT with SARS if your business makes taxable supplies of more than R2.3 million in any consecutive 12 months (the threshold increased from R1 million on 1 April 2026). Registration is voluntary once taxable supplies exceed R120,000. Compulsory registration must be submitted within 21 business days of crossing the threshold.

What this means for your business

VAT (Value-Added Tax) is charged at 15% on most goods and services sold in South Africa. If your business is registered for VAT, you charge VAT on your sales (output tax) and claim back the VAT you paid on business purchases (input tax). If your turnover stays below the threshold, you do not have to register – but you also cannot charge VAT or claim input tax back.

The 2026 change matters because thousands of small businesses that were forced to register under the old R1 million threshold now fall below the new R2.3 million line, while growing businesses have more breathing room before registration becomes compulsory.

Who must register for VAT

  • Compulsory: any person or business (company, close corporation, trust, partnership or sole proprietor) whose taxable supplies exceed, or are expected to exceed, R2.3 million in any consecutive 12-month period.
  • Voluntary: any business whose taxable supplies exceeded R120,000 in the past 12 months, or are expected to exceed R120,000 in the next 12 months under a written contract.
  • Not required: businesses making only exempt supplies (for example residential rent or certain financial services), employees earning a salary, and hobbies that are not run as a business.

The 2026 VAT thresholds at a glance

Item Before 1 April 2026 From 1 April 2026
Compulsory registration threshold R1 million R2.3 million
Voluntary registration threshold R50,000 R120,000
Standard VAT rate 15% 15% (unchanged)
Registration deadline after crossing threshold 21 business days 21 business days (unchanged)

Step-by-step: how to register for VAT

  1. Work out your rolling 12-month taxable turnover. Add up your sales for the last 12 months, or the sales you expect under signed contracts.
  2. Register or log in to SARS eFiling. Your business must be linked to your eFiling profile.
  3. Open SARS Registered Details and select Maintain SARS Registered Details.
  4. Choose “Add new product registration” and select VAT (form VAT101).
  5. Complete the VAT container: trading name, liability date, business activity code, value of taxable supplies, accounting basis, tax period and banking details.
  6. Submit and watch your eFiling correspondence page. SARS may issue a Registration Application Review Notice asking for supporting documents within 21 days.
  7. Receive your Notice of Registration with your VAT number, then start charging VAT from your liability date.

Documents you will need

Document Notes
CIPC registration certificate For companies and close corporations
Certified ID copies Directors, members or the sole proprietor
Bank confirmation letter Bank-stamped, in the business name
Proof of business address Lease agreement or utility bill
Proof of trading Invoices, contracts or management accounts showing turnover

Costs and deadlines

Item Detail
SARS registration fee Free – SARS does not charge to register for VAT
Compulsory registration deadline Within 21 business days of exceeding R2.3 million
Supporting documents deadline Within 21 business days if SARS issues a review notice
VAT201 returns after registration Usually every 2 months (Category A/B); monthly for larger vendors

Common mistakes to avoid

  • Confusing turnover with profit – the R2.3 million test looks at total taxable sales, not what is left after expenses.
  • Forgetting that zero-rated supplies (like basic foods) still count towards the threshold, even though you charge 0% VAT on them.
  • Missing the 21-business-day window and getting assessed with backdated VAT, penalties and interest.
  • Splitting one business into several entities to stay under the threshold – SARS can aggregate connected businesses.
  • Registering voluntarily without checking whether your customers can claim input VAT – if they cannot, your prices simply become 15% more expensive.

What happens if you do not register

If you were required to register and did not, SARS can backdate your registration to the date you crossed the threshold. You will owe the output VAT you should have charged, plus interest and penalties – even if you never actually collected that VAT from your customers. Late or missed VAT201 returns after registration attract administrative penalties per outstanding return.

A South African example

Thandi runs a catering company in Durban. Her monthly sales average R180,000, so her rolling 12-month turnover is about R2.16 million – just below the new R2.3 million threshold, so registration is not compulsory yet. She signs a contract in June worth R300,000, which will push her over the line within 12 months. Because the expectation is based on a written contract, she must apply for VAT registration within 21 business days. She registers on eFiling, uploads her CIPC certificate, bank letter and the contract, and receives her VAT number after SARS validates the application.

Free tool: check your VAT position

Use our free calculator below to check whether you need to register, and to add or remove 15% VAT from any amount.

BizAnswers VAT Tool (2026 thresholds)
1. Do I need to register for VAT?

2. Add or remove VAT (15%)

This tool is a guide only. Always verify your VAT position with official South African government sources (sars.gov.za) or a registered tax practitioner.

Frequently asked questions

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

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

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

You must apply within 21 business days from the date your taxable supplies exceeded, or will exceed, R2.3 million.

Can I register for VAT voluntarily?

Yes. If your taxable supplies exceeded R120,000 in the past 12 months, or are expected to exceed that amount under a written contract, you may apply for voluntary registration through SARS eFiling.

What is the VAT rate in South Africa?

The standard VAT rate is 15%. Some supplies are zero-rated or exempt under the Value-Added Tax Act 89 of 1991.

Where do I register for VAT?

Registration is done on SARS eFiling under SARS Registered Details, or by booking a virtual appointment through the SARS eBooking system. The application form is the VAT101.

Official sources

Related questions

Important: Always verify this information with official South African government sources before acting. Tax rules, thresholds and deadlines can change. Check sars.gov.za or call the SARS contact centre on 0800 00 7277.

BizAnswers is a privately run knowledge hub for South African entrepreneurs. It is not a government department and not a free government service. If you would rather have a professional handle your SARS tax returns and VAT registration, a registered tax practitioner can do it for you.

Last reviewed: September 2026 | Sources: South African Revenue Service, Value-Added Tax Act 89 of 1991 | Applies to: South African businesses