The VAT thresholds changed in 2026
From 1 April 2026, South Africa’s compulsory VAT registration threshold increased to R2.3 million and the voluntary registration threshold increased to R120,000, subject to the applicable rules and exceptions.
That change matters because a business that relied on the old R1 million / R50,000 thresholds may now be working from outdated information.
2026 VAT snapshot
- 15% standard VAT rate.
- R2.3m compulsory registration threshold.
- R120k voluntary threshold in the general case.
- The compulsory threshold is measured over a consecutive 12-month period.
- A compulsory registration application should generally be made within 21 business days after the threshold is exceeded.
15%
Standard VAT rate
R2.3m
Compulsory threshold
R120k
Voluntary threshold
What counts towards the threshold?
The threshold is based on the value of taxable supplies, not simply the total amount of money that moves through a bank account. The VAT treatment depends on what the business supplies and whether those supplies are standard-rated, zero-rated or exempt.
This is why a turnover figure on its own is not always enough to determine the VAT position. The nature of the supplies matters too.
Compulsory registration
Registration is compulsory where taxable supplies in any consecutive 12-month period exceed R2.3 million, or where a written contractual obligation means taxable supplies in a 12-month period will exceed that amount.
Businesses approaching the threshold should monitor taxable supplies regularly rather than waiting for year-end accounts.
Voluntary registration
Businesses below the compulsory threshold may be able to register voluntarily where the relevant requirements are met. Voluntary registration can make commercial sense in some situations — particularly where customers prefer dealing with VAT vendors or the business incurs meaningful VAT-bearing expenditure — but it also introduces ongoing administration and compliance obligations.
The decision should therefore be made on the numbers and the business model rather than simply because “being VAT registered looks bigger”.
Three simple turnover examples
R900,000
Below the compulsory threshold. VAT registration is not compulsory on this figure alone, although voluntary registration may be possible if the requirements are met.
R2.2 million
Still below the current compulsory threshold, but close enough that the business should monitor taxable supplies carefully over the rolling 12-month period.
R2.5 million
Above the current compulsory threshold, assuming the amount represents taxable supplies and no special rule changes the analysis.
What changes once you are registered?
VAT registration creates an ongoing process, not a once-off admin task. Vendors need to maintain proper records, issue compliant tax invoices where required, account correctly for output and input VAT, and submit VAT201 returns for the periods allocated by SARS.
Common VAT mistakes to avoid
- Waiting until long after the compulsory threshold has been exceeded.
- Using total cash received instead of analysing taxable supplies properly.
- Claiming input VAT without appropriate supporting documents.
- Incorrectly treating supplies as zero-rated or exempt.
- Allowing VAT201 submissions to drift away from the accounting records.
- Ignoring SARS verification or supporting-document requests.
What to prepare for a registration
SARS may request information about the entity, its activities, banking details, registered particulars and evidence of taxable supplies. The exact supporting documents depend on the applicant and the basis for registration.
Getting the accounting records and supporting evidence in order before the application is normally much easier than trying to correct inconsistent information after SARS queries it.
Before registering voluntarily
Consider the likely input VAT benefit, the type of customers you serve, the pricing impact, the additional admin and whether your systems are ready to produce clean VAT records every period.
Already VAT registered?
The higher 2026 threshold does not mean every vendor below R2.3 million should automatically deregister. The financial and commercial consequences should be considered before making that decision.
Unsure whether you should register for VAT?
Send us your approximate taxable turnover, what the business does and whether you expect sales to increase. We can help you identify the right starting point.
Official SARS references: Register for VAT · Budget 2026 VAT threshold FAQs
Figures in this article reflect SARS information available in October 2026. This is general information and does not replace advice based on your specific circumstances.