Should I Register for VAT in South Africa?

You must register for VAT in South Africa once your taxable supplies exceed R2.3 million in a 12-month period. Voluntary registration is permitted once they exceed R120,000 a year. Whether to register voluntarily before the R2.3 million threshold depends on your client base, your expenses, and whether VAT registration helps or hurts your pricing.

Updated for 1 April 2026. SARS raised the compulsory threshold from R1 million to R2.3 million and the voluntary threshold from R50,000 to R120,000. SARS is already applying the new figures to new registrations while the law change goes through Parliament. Source: SARS, Budget 2026 FAQs.

This is not tax advice. Always consult a registered tax practitioner before making VAT decisions for your business.

When is VAT registration mandatory?

You are required to register as a VAT vendor with SARS when your taxable supplies exceed R2.3 million in any rolling 12-month period. Taxable supplies include most goods and services you provide in the course of your business.

You must register within 21 business days of crossing this threshold. Late registration results in SARS treating you as a VAT vendor from the date you should have registered, meaning you may owe back-VAT on invoices you already issued. If you bill from invoicing software in South Africa with a revenue report, filter it to the last 12 months every month and you will see the threshold coming.

Registration is also compulsory if you have a written contract showing that taxable supplies will exceed the threshold in the next 12 months, even if you have not reached it yet.

When is VAT registration voluntary?

You may choose to register for VAT if your taxable supplies exceed R120,000 in any 12-month period. Below that, SARS will generally not accept a voluntary registration application.

Voluntary registration makes sense in certain situations, but it is not the right choice for every small business.

Pros and cons of voluntary VAT registration

Reasons to register voluntarily:

• Claim back input VAT on expenses. If you spend significantly on VAT-inclusive expenses (equipment, software, rent, professional services), you can claim back the VAT component. At 15%, this can be meaningful for capital-intensive businesses.
• Look more established to corporate clients. Many large companies and government entities prefer to work with VAT-registered suppliers. A VAT number on your invoice signals a level of business formality.
• You can step back later. If your taxable supplies stay below R2.3 million, you may apply to deregister, so voluntary registration is not a one-way door.

Reasons not to register voluntarily:

• Your prices effectively increase by 15%. If your clients are not VAT registered (such as consumers or very small businesses), they cannot claim back the VAT you charge. Your prices become 15% more expensive overnight.
• Administrative overhead. VAT-registered businesses must submit VAT201 returns every 2 months and maintain proper records of all taxable supplies and input tax claims.
• Cash flow risk. You must pay over the VAT you collect to SARS by the last business day of the month following the tax period (the 25th if you file or pay outside eFiling), whether or not your clients have paid you yet.

What changes when you register for VAT?

Once registered, you must:

1. Charge 15% VAT on all taxable supplies in South Africa
2. Issue tax invoices (not standard invoices) for all sales
3. Submit VAT201 returns every 2 months (or monthly if SARS requires it based on your turnover)
4. Pay net VAT to SARS by the last business day of the month after each tax period if you file and pay on eFiling, or by the 25th if you file or pay any other way (SARS calendar)
5. Keep records of all tax invoices issued and received for at least 5 years
6. Display your VAT registration number on all tax invoices

Your invoicing software (like Rebill) needs to support VAT calculations. Rebill automatically calculates 15% VAT, shows it separately on the invoice, and includes your VAT number on all tax invoices.

How to register for VAT with SARS

1. Check eligibility. Your taxable supplies must be above R120,000 a year for voluntary registration. Registration is compulsory if they exceeded R2.3 million in the past 12 months, or a written contract shows they will in the next 12.
2. Register on eFiling. Go to www.sars.gov.za and log in to eFiling. Select “Register” under the VAT section.
3. Complete the VAT101 form. This is the VAT registration application. You will need your business details, bank account information, and an estimate of your monthly taxable turnover.
4. SARS processes the application. Registration typically takes 3 to 5 business days. SARS may request supporting documents.
5. Receive your VAT registration number. This is a 10-digit number starting with 4. Add it to your invoicing software and all future invoices.