Facts checked against SARS on 30 September 2026. From 1 April 2026, a South African business must register for VAT once its taxable supplies exceed, or are likely to exceed, R2.3 million in any 12-month period. The previous compulsory threshold was R1 million. Voluntary registration is now possible once taxable supplies exceed R120,000, up from R50,000. Existing vendors below R2.3 million may apply to deregister.

That is the whole change in one paragraph. The rest of this article explains who it affects, how the 12-month test works, what to do if you're already registered, and when registering voluntarily still makes sense.

What changed on 1 April 2026?

The 2026 Budget more than doubled the compulsory VAT registration threshold. SARS confirms the new figures in its Budget 2026 FAQs:

	Before 1 April 2026	From 1 April 2026
Compulsory VAT registration	Taxable supplies above R1 million in 12 months	Taxable supplies above R2.3 million in 12 months
Voluntary VAT registration	Taxable supplies above R50,000	Taxable supplies above R120,000
Turnover tax ceiling	Turnover up to R1 million	Turnover up to R2.3 million

The standard VAT rate did not change as part of this. What changed is who has to be in the VAT system at all.

For a small business, that matters. A business turning over R1.5 million a year, which had to register under the old rules, no longer has to. So does one at R2 million. Those businesses now have a choice they didn't have before.

Who must register for VAT now?

You must register if the value of your taxable supplies in any consecutive 12-month period:

has exceeded R2.3 million, or
is likely to exceed R2.3 million, for example because you've signed a contract that will take you over.

Three points trip people up.

It's a rolling 12 months, not your financial year. SARS looks at any consecutive 12-month period. If your sales from May last year to April this year pass R2.3 million, you've crossed the threshold, even if neither financial year did on its own.

"Taxable supplies" means sales that attract VAT, including zero-rated supplies. Exempt supplies, such as residential rent or certain financial services, don't count towards the threshold.

"Likely to exceed" counts. If you win a contract in March that will clearly take you past R2.3 million by December, you must register once that becomes likely, not wait until the sales have actually happened.

Missing the threshold is expensive. If you should have registered and didn't, SARS can treat you as a vendor from the date you should have registered. You then owe VAT on sales you never charged VAT on, and that comes out of your own margin.

I'm already VAT-registered. Should I deregister?

If your taxable supplies will stay below R2.3 million in any 12-month period, SARS allows you to apply to cancel your VAT registration. SARS may also contact some vendors itself: where a vendor's taxable supplies over the preceding 12 months were below R120,000, SARS will notify it of its intention to cancel the registration.

Deregistering isn't automatically the right move. Before you apply, weigh up:

Exit VAT on your assets. When your registration is cancelled, you must declare output VAT in your final return on certain assets you still hold, such as equipment, vehicles and stock on which you claimed input VAT. For an asset-heavy business, that can be a significant once-off cost.

Your customers. If you mostly sell to other VAT-registered businesses, your VAT costs them nothing, because they claim it back. Deregister and you lose your input VAT claims, so your costs rise, and you either absorb that or raise prices. If you mostly sell to the public, the maths often runs the other way: deregistering can let you drop your prices by the VAT, or keep the same price and the margin.

Admin. Leaving the VAT system means no more VAT201 returns and less record-keeping pressure. For a very small business, that time saving is real.

Growth. If you expect to pass R2.3 million again within a year or two, deregistering now only to re-register later may not be worth the disruption.

You also have to settle what you owe first. SARS won't finalise a cancellation while VAT returns or payments are outstanding, and you must keep charging VAT until the final tax period SARS gives you in its cancellation notice.

When does voluntary VAT registration still make sense?

Voluntary registration is now available once taxable supplies exceed R120,000 over 12 months. It can suit you when:

Your customers are mostly VAT vendors. Many larger businesses prefer to deal with VAT-registered suppliers, and your VAT is recoverable for them.
You have large start-up costs. Registering lets you claim input VAT on equipment and set-up costs.
You export or make zero-rated supplies. You charge 0% VAT but can still claim input VAT on your costs, which can put you in a refund position.

It usually doesn't suit a business that sells mainly to consumers, because registering adds VAT to your prices and your customers can't claim it back.

What about turnover tax?

The Budget raised the turnover tax ceiling to R2.3 million too, and the first R600,000 of turnover is now taxed at 0%. Turnover tax is a simplified system for micro businesses that replaces income tax, provisional tax, capital gains tax and dividends tax with a single tax on turnover.

Turnover tax and VAT are separate systems. SARS confirms a business can be registered for both. For some small businesses that are no longer required to be VAT vendors, the combination of deregistering from VAT and electing turnover tax can significantly cut both tax and admin. It depends on your margins, so it's worth modelling before you decide.

How to register for VAT

Check the threshold. Total your taxable supplies for the past 12 months and the next 12.
Gather your supporting documents. SARS lists them in its guide VAT-REG-02-G01. Missing documents are the most common reason for delays.
Apply through SARS eFiling, or book a virtual appointment through SARS's eBooking system.
Answer any review notice. If SARS needs more information, it sends a Registration Application Review Notice, and you have 21 days to respond.
Update your invoices and systems from your registration date and diarise your first VAT201.

What to do next

Not registered, turnover growing? Track your rolling 12-month taxable supplies monthly, so you register on time.
Registered, under R2.3 million? Don't deregister on reflex. Work out the exit VAT on your assets and what it does to your customers' costs first.
Micro business? Compare VAT plus income tax against turnover tax for your numbers.

N&V Accounting & Tax Services handles VAT registration, VAT201 returns and deregistration decisions for businesses in Umhlanga, Durban and across KwaZulu-Natal. See our VAT & EMP service, or book a consultation to go through your numbers.

Frequently asked questions

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

From 1 April 2026, VAT registration in South Africa is compulsory once taxable supplies exceed, or are likely to exceed, R2.3 million in any 12-month period, up from R1 million. The voluntary registration threshold rose from R50,000 to R120,000. The turnover tax ceiling for micro businesses also increased to R2.3 million from the same date. Source: SARS, Budget 2026 FAQs.

Can I deregister for VAT if my turnover is below R2.3 million?

Yes. SARS allows a vendor to apply to cancel its VAT registration if its taxable supplies will be less than R2.3 million in any 12-month period. On cancellation you must declare output VAT on certain assets you still hold, and you can no longer claim input VAT. Weigh up the exit VAT and the effect on your customers before applying.

Do small businesses have to charge VAT?

A small business only charges VAT once it is registered as a VAT vendor. Registration is compulsory above R2.3 million in taxable supplies over 12 months, from 1 April 2026, and optional above R120,000. Below the compulsory threshold, a business can usually choose to stay unregistered, and qualifying micro businesses may consider turnover tax instead of income tax.

Does the 12-month period for VAT registration mean my financial year?

No. SARS tests your taxable supplies over any consecutive 12-month period, not your financial year. If your sales over any rolling 12 months pass R2.3 million, or are likely to because of a contract you've signed, you must register. Track your rolling total monthly so you know when you're getting close.

Sources

SARS, Budget 2026 Frequently Asked Questions: https://www.sars.gov.za/about/sars-tax-and-customs-system/budget/budget-2026-frequently-asked-questions/
SARS, What is the new threshold for VAT registration?: https://www.sars.gov.za/faq/what-is-the-new-threshold-for-vat-registration/
SARS, Register for VAT: https://www.sars.gov.za/types-of-tax/value-added-tax/register-for-vat/
SARS, Cancellation of VAT registration: https://www.sars.gov.za/types-of-tax/value-added-tax/cancellation-of-vat-registration/
SARS, What do VAT changes mean for SMMEs?: https://www.sars.gov.za/faq/what-do-vat-changes-mean-for-smmes/
SARS, Turnover tax: https://www.sars.gov.za/types-of-tax/turnover-tax/

This article is general information, not tax advice for your specific situation. VAT thresholds and rules change with each Budget; check the date this page was last reviewed.

Editor's notes (do not publish):

"SARS can treat you as a vendor from the date you should have registered" and "exempt supplies such as residential rent or certain financial services don't count" are standard VAT Act positions (s23; s12). They were not re-fetched on 30 Sep 2026. Director to confirm wording at review.

Deliberately not stated: the claim that R1 million was unchanged "since 2009" (SARS's "since 2009" wording refers to turnover tax, not VAT).

VAT Registration Threshold 2026: R2.3 Million Explained