New VAT Registration Thresholds from 1 April 2026: Should Your Business Stay Registered?

The 2026 Budget delivered the biggest change to South African VAT registration in years. From 1 April 2026, the turnover thresholds that decide who must — and who may — register as a VAT vendor moved substantially for the first time since they were set:

• Compulsory registration: up from R1 million to R2.3 million of taxable supplies in any 12-month period.
• Voluntary registration: up from R50,000 to R120,000 of taxable supplies.

The VAT rate itself is unchanged at 15%. But for thousands of small businesses, these new thresholds change the answer to a fundamental question: should we be VAT-registered at all?

If your turnover is under R2.3 million: you now have a choice

Businesses that were compelled to register under the old R1 million threshold are no longer obliged to be vendors. Deregistering is tempting — no more VAT201 returns, no more output VAT on your invoices — but it is not automatically the right move.

Reasons to consider deregistering

• Your customers are mostly private individuals who cannot claim VAT back — dropping VAT effectively cuts your prices by 15% or fattens your margin.
• Your input VAT claims are small (service businesses with low VAT-bearing costs).
• The admin burden of VAT returns outweighs the benefit.

Reasons to stay registered

• Your customers are VAT-registered businesses — they claim the VAT back anyway, and being a vendor keeps you tender- and procurement-friendly.
• You have significant VAT-bearing costs (stock, equipment, fuel, rent) and the input claims matter to your cash flow.
• You expect to cross R2.3 million soon — deregistering and re-registering in quick succession is disruptive.

Deregistration also has an exit cost that surprises many owners: VAT may be payable on assets you hold at deregistration, because you claimed input VAT when you bought them. Get the numbers checked before you apply.

If you are growing: know your trigger point

Once taxable supplies exceed R2.3 million in any rolling 12-month period (or are contractually certain to), registration becomes compulsory and you must apply within 21 business days. Late registration can mean SARS backdates your liability — you owe output VAT on sales you never charged VAT on.

If you are small but want the benefits: the R120,000 door

Voluntary registration now starts at R120,000 of taxable supplies. Start-ups investing heavily in equipment and stock often register voluntarily to claim input VAT during the build-out phase — worthwhile, provided you can handle the ongoing compliance.

Get a numbers-based answer

Whether to register, stay, or go is a calculation, not a guess: it depends on your customer mix, cost structure and growth curve. Our bookkeeping and VAT team runs that calculation for Pretoria businesses every week, and handles the registration or deregistration paperwork with SARS end to end. Book a free consultation and bring your last 12 months of turnover — we will give you a straight answer.

Source: SARS — Value-Added Tax.