South Africa's New VAT Registration Threshold: What Changed in 2026

The Threshold Actually Changed

As of 1 April 2026, the compulsory VAT registration threshold in South Africa increased significantly, from R1 million to R2.3 million in annual turnover. The voluntary registration threshold also moved, from R50,000 up to R120,000.

If your business has been sitting somewhere in that R1 million to R2.3 million range, this is genuinely worth pausing on. A business that was required to register for VAT under the old rules may no longer be required to under the new ones. The VAT rate itself hasn't changed. It remains 15%. What's changed is who's actually obligated to charge it in the first place.

What the Thresholds Actually Mean

South Africa's VAT system has two separate thresholds, and they work differently:

• Compulsory registration (now R2.3 million): once your business's taxable turnover exceeds this amount in any consecutive 12-month period, you're legally required to register as a VAT vendor, whether you want to or not.
• Voluntary registration (now R120,000): below the compulsory threshold, a business can still choose to register for VAT once its turnover exceeds this lower amount, even though it isn't required to.

Under the old rules, a business earning R1.2 million a year, for example, would have crossed the compulsory threshold and been required to register. Under the new rules, that same business sits comfortably below R2.3 million and has no compulsory obligation to register at all.

Should You Still Register Voluntarily?

This is genuinely a decision worth thinking through carefully rather than a straightforward yes or no, and it depends heavily on your specific business and client base. A few things worth being aware of, purely as information rather than a recommendation for your specific situation:

• If you're not VAT-registered, you cannot charge VAT on your invoices, but you also cannot claim input VAT back on what you pay your own suppliers.
• Some larger clients, particularly other VAT-registered businesses, may have a preference for working with VAT-registered suppliers, since it affects their own input VAT claims.
• Registering voluntarily adds an ongoing compliance obligation (VAT201 returns, on whichever filing frequency applies to you) that a non-registered business doesn't have to manage at all.

Since this genuinely depends on your specific numbers, client mix, and business model, this is a good one to work through with your accountant rather than decide from a general guide like this one.

If You're Already VAT-Registered

If your business is currently registered for VAT and now falls below the new R2.3 million compulsory threshold, the higher threshold doesn't automatically deregister you. VAT deregistration is its own separate process with its own requirements, and staying registered voluntarily remains entirely valid if it suits your business. If you're considering deregistering now that you're no longer obliged to be registered, that's another conversation worth having with your accountant, since it has its own implications for input VAT you've claimed historically.

Frequently Asked Questions

Does the 15% VAT rate change with this update?
No. Only the registration thresholds changed. The VAT rate itself remains 15%.

I'm currently registered for VAT and now earn less than R2.3 million. Do I have to deregister?
No, the higher threshold doesn't force deregistration. You can remain voluntarily registered, or look into deregistering if that suits your business better — that decision is worth discussing with your accountant given the implications either way.

Can I still register for VAT if I earn less than R120,000?
Voluntary registration below the R120,000 threshold generally isn't available under the current rules. The R120,000 figure is the minimum turnover required before voluntary registration becomes an option at all.

How do I know which VAT filing frequency applies to me once registered?
Most VAT vendors file bi-monthly. Larger businesses above a higher turnover threshold may be required to file monthly, and some smaller categories of business file less frequently. This is confirmed at registration and can be checked directly with SARS or your accountant.

How ZinithX Pro Helps

Whether you're newly exempt from compulsory registration, weighing up voluntary registration, or already a registered vendor managing ongoing VAT201 obligations, ZinithX Pro generates auto-calculated, VAT-compliant reports directly from your imported bank statements and invoices, so your VAT position stays accurate and ready whenever you need it, without manual recalculation. Learn more on our financial statements page.