From 1 April 2026, South Africa's VAT compulsory registration threshold increased to taxable supplies of more than R2.3 million in any 12 months, and the voluntary threshold increased to more than R120,000 in the past 12 months. The standard VAT rate remains 15%; a higher registration threshold does not automatically cancel an existing VAT registration.
These threshold changes are confirmed by SARS's VAT page, which describes the current registration rules. The practical task is to reassess your business's registration position without interrupting valid invoicing, returns or record keeping.
What changed and what did not
| VAT matter | Current position |
|---|---|
| Compulsory registration | Taxable supplies of more than R2.3 million in any 12 months from 1 April 2026 |
| Voluntary registration | Taxable supplies of more than R120,000 in the past 12 months from 1 April 2026 |
| Standard VAT rate | 15% |
| Existing registrations | Continue unless appropriately changed or cancelled through SARS |
The previous compulsory threshold was R1 million and the previous voluntary threshold was R50,000. Do not use the new figures for an earlier period without reviewing which rules applied then.
These changes concern registration thresholds, not a general exemption from tax or bookkeeping. Smartbook's main service is accounting and financial management, which helps owners assess the rules using reliable sales and purchase records.
Measure taxable supplies, not bank deposits
The threshold concerns taxable supplies. Total bank deposits can include loans, owner contributions and other amounts that are not sales. A bank-based estimate can therefore give the wrong answer.
Equally, cash sales or unpaid customer invoices can be overlooked if you examine only receipts. Reconcile sales records and classify the activities correctly. Taxable supplies and exempt activities have different treatment under VAT rules.
Do not assume the test resets whenever the calendar or financial year changes. The current compulsory wording uses any 12 months. Keep a rolling view and ask your accountant to assess both the relevant history and circumstances where future contractual supplies matter.
If you are not VAT registered
Review whether compulsory registration applies to the business's activities and supply levels. If the threshold is exceeded, investigate the correct registration position promptly. Confirm the required application timing and process directly with SARS or your accountant.
If you are below the compulsory level, voluntary registration may be available where the conditions are met. Exceeding the current voluntary threshold does not remove every other requirement. SARS will assess the application and supporting evidence.
Do not charge VAT merely because you plan to register or believe registration will be approved. Confirm the effective registration date and the treatment of the relevant supplies. Customers need correct invoices, not a VAT amount added in anticipation of an application outcome.
If you are already a VAT vendor
Continue applying the obligations attached to your registration while it remains effective. A change to the compulsory threshold is not automatic deregistration and does not authorise you to stop filing returns or charging VAT.
If you are considering cancellation, review the eligibility and consequences first. The treatment of stock, assets and earlier deductions may require adjustments. Final returns and the effective cancellation date also need to be addressed through the proper SARS process.
The SARS VAT guide for vendors explains registration, cancellation and adjustments. Do not judge the decision only by the expected administrative saving. Customer pricing, input deductions and contracts can all be affected.
Decide whether voluntary registration suits the business
A business selling mainly to VAT vendors may face different commercial considerations from a business selling mainly to consumers. Input-VAT deductions may help with qualifying costs, but registration also brings output-tax and record-keeping obligations.
Compare the effect on prices, margins and administration using your own figures. Do not assume that registering always improves profit or that staying unregistered always makes the business cheaper. The customer contract and the actual nature of supplies matter.
Ask what happens if the business grows after choosing not to register, or if it stops making the supplies supporting a voluntary registration. Keep the decision under review rather than treating the registration application as a once-off choice with no ongoing consequences.
Keep VAT invoices and returns correct
The invoice rules still require a full tax invoice for consideration of more than R5,000, with an abridged invoice allowed for R5,000 or less. For R50 or less, no tax invoice is required, but retain the till slip. Issue the invoice within 21 days of the supply.
A registration-threshold change does not loosen the requirements for input deductions. The business still needs qualifying taxable use, prescribed evidence and review of specific exclusions. A receipt is not proof that every VAT amount can be claimed.
For VAT201 returns, the verified deadline is the 25th of the month after the period ends for manual submissions and payments, or the last business day of that month for eFiling submissions and payments. Use the actual VAT period allocated to the business.
Update systems without rewriting history
Check accounting software, invoice templates and VAT reports against the business's confirmed registration position. A tax-rate setting and a registration threshold are different settings. Do not change the standard rate merely because an old news story discussed a proposed increase.
If registration is cancelled, plan the cutover using the confirmed effective date and advice on adjustments. Keep earlier VAT records available. Changing a software preference does not remove the legal need to explain historic returns.
For a new registration, review opening information, invoices and records from the effective date. Separate transactions needing specialist review instead of applying a single code to the entire history. Maintain an audit trail of the setup and any corrections.
Frequently asked questions
Did the standard VAT rate increase in 2026?
The standard rate remains 15%. The changes in this guide concern the registration thresholds.
Can I stop filing because I fall below the new threshold?
No. An existing registration must be dealt with through the appropriate SARS process. Continue its obligations while it remains effective.
Is taxable turnover the same as cash received?
No. Classify supplies correctly and account for relevant sales and timing. Loans and owner funding are not automatically sales.
Is voluntary registration automatically approved?
No. The threshold is part of the assessment, and other conditions and supporting evidence still matter.
Need an accountant?
Smartbook provides bookkeeping, VAT, payroll, tax and financial reporting support. Reliable records let you assess registration decisions and maintain the returns and invoices that follow. See how our accounting service works.