From 1 April 2026, the general compulsory VAT registration threshold increased to R2.3 million in taxable supplies, and the general voluntary threshold increased to R120,000. Registration depends on taxable supplies, not simply accounting profit or money moving through a bank account, and detailed rules and exceptions can affect the outcome.

Taxable supplies are the starting point

VAT registration is measured against the value of taxable supplies made or expected to be made in the relevant period. Standard-rated and zero-rated supplies are generally taxable, while exempt supplies are treated differently.

For the current official requirements, refer to SARS’s VAT guidance and SARS’s Budget 2026 guidance.

Turnover in management accounts may not equal taxable supplies. Deposits, asset sales, intercompany movements and exempt income should be analysed before applying the threshold.

Compulsory registration from 1 April 2026

A person who exceeds the compulsory threshold, or enters into written contractual arrangements that will cause the threshold to be exceeded, may have to register within the prescribed timeframe.

Delaying registration can create exposure for output tax, penalties and interest even where the business did not charge VAT to customers.

Voluntary registration

A business above the voluntary threshold but below the compulsory threshold may apply if it satisfies SARS requirements. Voluntary registration can help where customers prefer VAT vendors or the business incurs substantial input tax.

It can also add cash-flow and administrative pressure. The business must issue valid tax invoices, file returns, pay output tax and maintain supporting documents.

Commercial questions before registering voluntarily

• Are most customers VAT vendors that can claim input tax?
• Will prices be increased by VAT or absorbed within current margins?
• How much valid input tax is likely to be claimable?
• Can the bookkeeping system produce accurate VAT reports?
• Will invoices and credit notes meet VAT requirements?
• Can the business fund VAT before customers pay?

Documents and profile readiness

SARS may request identity, banking, address, financial, contractual and business-activity evidence. The registered representative and eFiling access should be in order before the application is lodged.

Inconsistent addresses, inactive tax types or documents that do not support the stated turnover can delay verification.

After registration

• Confirm the effective date and tax period
• Update quotes, contracts and invoices
• Configure accounting software correctly
• Separate taxable, zero-rated and exempt supplies
• Retain valid tax invoices for input claims
• Reconcile VAT control accounts to each return
• Monitor payment dates and SARS correspondence

Deregistration is a separate decision

A vendor below the new compulsory threshold should not assume that VAT registration disappears automatically. Deregistration can have exit-VAT and commercial consequences and requires a proper application or SARS process.

Obtain advice before cancelling, especially where assets and stock previously generated input-tax claims.

Example: crossing the threshold mid-year

A service business invoices R2.1 million in taxable supplies and signs a new contract worth R500,000 that will be delivered over the next few months. Management should not wait until the bank receipts exceed R2.3 million. The written contractual commitment and expected taxable supplies may make the registration timing relevant before the final invoice is issued.

VAT readiness test

Before applying, process a sample month as though the business were already registered. Test invoice wording, source documents, VAT codes, credit notes, reconciliations and cash flow. The exercise exposes weaknesses before they become statutory errors.

Related LMW guidance covers provisional tax and IRP6 returns, ITR14 company income-tax returns, and recurring SARS administrative penalties.

How LMW Financial Solutions can assist

LMW can review turnover and taxable supplies, assess registration readiness, assist with the SARS process and help set up practical VAT compliance controls. The final decision should reflect both the legislation and the business’s pricing, customers and cash flow.

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Frequently Asked Questions

What is the compulsory VAT threshold in 2026?

From 1 April 2026, the general compulsory threshold is R2.3 million in taxable supplies, subject to the detailed VAT rules.

What is the voluntary VAT threshold in 2026?

From 1 April 2026, the general voluntary threshold is R120,000, although eligibility requirements and exceptions still apply.

Is VAT based on profit?

No. VAT registration generally looks at taxable supplies, not net profit.

Can I cancel VAT registration because turnover is below R2.3 million?

Possibly, but deregistration is not automatic and can have exit-VAT and commercial consequences.