VAT Registration Threshold in South Africa: R2.3 Million Compulsory, R120,000 Voluntary (2026 Guide)

The two thresholds, and the date they changed

Two numbers decide whether a South African business is in the VAT system. The compulsory threshold is R2.3 million of taxable supplies in any consecutive 12-month period. Cross it, or sign a written contract that makes crossing it certain, and you have 21 business days to apply. The voluntary threshold is R120,000 of taxable supplies in the past 12 months. Above that line you may register if you choose. Below it SARS registers only a few listed cases, such as a business with a signed contract that will carry it over the line.

Both figures changed on 1 April 2026, in the 2026 Budget. Before that date the compulsory line was R1 million and the voluntary line R50,000, so a business that was obliged to register in March 2026 may have no obligation at all in April. The rate itself did not move. VAT is still 15%.

The Turnover Tax threshold moved to R2.3 million in the same Budget, with a tax-free band of R600,000, so the turnover at which a micro business leaves that scheme is now the same turnover at which it must register for VAT. That is tidy on paper. In practice it means one good year can trigger two changes of tax regime at once. SARS measures both in taxable supplies, which is turnover, not profit; the glossary entry on the turnover threshold covers the other limits that key off turnover, such as B-BBEE status.

A warning about what you will read elsewhere. On 7 September 2026, four of the nine pages on Google's first page for this query, close to half, still gave the R1 million figure, and one of them was gov.za's own "Register for VAT" page. SARS's pages carry the new numbers. If a page does not mention 1 April 2026 anywhere, treat its threshold as stale.

What counts as taxable supplies

Taxable supplies are the goods and services you sell in the course of the business that carry VAT, whether at the standard 15% or at the zero rate. Exports are zero-rated and still count. Exempt supplies, such as residential rent, do not count towards the threshold, and neither does anything that is not a sale: a loan, a capital injection, a director's own money.

The measure is turnover, not profit, and it runs over any consecutive 12 months, not your financial year. A business that made R150,000 a month for a year has turned over R1.8 million and is still below the line. A business that made R200,000 a month is at R2.4 million and is over it. Check the rolling total at every month end. The obligation arises in the month the total crosses, not at year end.

When registering voluntarily pays, and when it costs you

The question arrives early, often the week a company is registered. Govchain registers companies and hears it before the first invoice goes out. SARS gives a new company an income tax number automatically. VAT is the first registration that is a choice, and at R120,000 the choice arrives early: a consultancy billing R10,000 a month is over the voluntary line within about a year.

Registration turns the VAT on what you buy into money you can claim back. That is input VAT, and it is the reason a business that is buying stock, equipment, a vehicle or a shop fit-out often registers before it has to. Fifteen percent of a R400,000 setup is R60,000 of input claims. A business that spends almost nothing on VAT-bearing costs gets almost nothing from this.

The second question is who pays you. If your customers are VAT vendors themselves, the 15% you add to invoices is money they claim straight back, so your price to them does not really change, and some of them will not deal with an unregistered supplier at all. If your customers are households, or businesses that cannot claim VAT, registering means either raising prices by 15% or absorbing it out of your margin. A hairdresser and a plumbing contractor can have the same turnover and opposite answers.

The third is the work. A registered vendor files a VAT201 for every period, due by the 25th of the month after the period ends; vendors under R30 million a year are on Category A or B and file every two months. A late VAT201 draws a 10% penalty plus interest. The VAT you collect is SARS's money from the day you invoice it, and a business that spends it as cash flow finds that out on the 25th.

Register voluntarily when:

• Your customers are mostly registered businesses or government, and you are spending on stock, equipment or premises that carry VAT.
• A tender or a large customer's vendor onboarding asks for a VAT number, which some do regardless of your size.
• You are close enough to R2.3 million that you will have to register within the year anyway, and you would rather do it in a quiet month than in the 21 business days after a busy one.

Wait when your customers are consumers, your costs are mostly salaries and other things without VAT on them, and your turnover is nowhere near the line. Voluntary registration is a real choice at R120,000 in a way it was not at R50,000. The new line puts a lot of one-person businesses in the zone where it deserves a calculation rather than a reflex.

Crossing R2.3 million: the 21 business days

Once the rolling 12-month total passes R2.3 million, you have 21 business days to apply. The same clock starts when you sign a written contract under which the business will exceed R2.3 million in the next 12 months, even if no invoice has gone out yet. A 12-month supply agreement worth R3 million triggers registration on signature.

Apply on eFiling or through an agent. SARS asks for proof of the turnover, bank details and the representative's identity. Govchain's VAT registration service handles the application and the supporting documents, and the service page carries the current turnaround.

Already registered, and now under the line

A vendor that registered because it crossed R1 million and now sits below R2.3 million is no longer obliged to be registered. It may stay, and for a business whose customers are vendors it usually should. It may also apply to cancel its registration.

Cancelling is not free. Deregistration can trigger VAT on the assets the business still holds on the day it leaves the system, because SARS treats them as supplied to you at that point. Run the number on stock and equipment before you apply. SARS moved the threshold in April and may still publish guidance on how it handles vendors who are now under the line. Read the SARS "Register for VAT" page in the sources below before acting, and get a practitioner's view on the exit VAT.

What registration commits you to

Registration gives the company a VAT number that must appear on its tax invoices. From the effective date you charge output VAT at 15% on every taxable sale, claim input VAT on your purchases, and pay or claim the difference on each VAT201. Keep the tax invoices from your suppliers. Without a valid one, the input claim is refused.

A registered tax practitioner can file the returns for you. Govchain's VAT returns service prepares, reviews and files each VAT201 from your bank feed for R2,000 a month, which is the sane option for a business that registered for the input VAT and not for a love of returns.

Sources

Every figure on this page comes from one of these documents. Check them before quoting a number; the regulators change them without telling anyone who linked the old one.

1. Register for VAT, SARS, updated 19 August 2026. The R2.3 million and R120,000 figures, the 21 business days, and the written-contract rule.
2. What is the new threshold for VAT registration?, SARS FAQ, 16 April 2026. Confirms the move from R1 million to R2.3 million on 1 April 2026.
3. Turnover Tax, SARS. The Turnover Tax threshold of R2.3 million and the R600,000 tax-free band after Budget 2026.
4. Register for VAT, gov.za. Still showed the old R1 million figure on 7 September 2026; listed here as the example of a stale page, not as a source for a number.