South Africa’s VAT Increase: What Actually Happened — and the 2026 VAT Changes That Matter

Updated 17 August 2026 — this article originally covered the VAT increase announced in the 2025 Budget. That increase was withdrawn before it took effect. Here is what actually happened, and what VAT looks like in 2026.

The short version: VAT is still 15%

In early 2025, National Treasury announced a two-phase increase in the VAT rate — to 15.5% from 1 May 2025 and to 16% from 1 April 2026. After significant political and public pushback over the lack of consultation, the government withdrew the increase on 24 April 2025, days before it was due to start. The standard VAT rate therefore remained at 15%, and Budget 2026 confirmed it stays there.

If your invoicing, quoting or point-of-sale systems were updated in anticipation of 15.5%, and you never rolled that back, it is worth checking now — charging the wrong VAT rate creates real reconciliation problems on your VAT201 returns.

The VAT change that did happen in 2026

While the rate stayed put, Budget 2026 made the first change to the registration thresholds in years, effective 1 April 2026:

• Compulsory registration: the threshold rose from R1 million to R2.3 million of taxable supplies in a 12-month period.
• Voluntary registration: the entry point rose from R50,000 to R120,000 of taxable supplies.

This is a significant shift for small businesses. Many businesses that were previously forced to register — with all the admin that brings — now fall under the compulsory threshold. We look at whether staying registered still makes sense for you in our guide to the new VAT registration thresholds.

What this means in practice

• Registered vendors: keep charging 15% and submitting VAT201 returns as normal. Nothing about your current obligations changed.
• Businesses under R2.3 million turnover: registration is now a choice, not an obligation. Deregistering can cut admin, but you lose input VAT claims — the right answer depends on your cost structure and customer base.
• Growing businesses: once taxable supplies exceed R2.3 million in any 12-month period, you must register within 21 business days.

Talk it through before you act

Registering, deregistering or fixing a mis-applied rate all have knock-on effects on pricing, cash flow and SARS compliance. Our bookkeeping and VAT team handles VAT registrations, VAT201 submissions and SARS correspondence for SMEs across Pretoria and Gauteng — book a free consultation if you want a second opinion on your VAT position.

Source: SARS — Value-Added Tax.