VAT registration is one of the most consequential steps a growing South African business takes — and in 2026 the rules changed for the first time in 17 years. Here’s the complete process: who must register, when, how, and what changes the day SARS approves your application.
Do you need to register?
The thresholds, effective 1 April 2026:
| Situation | Threshold |
|---|---|
| Compulsory registration | Taxable supplies above R2.3 million a year (raised from R1 million) |
| Voluntary registration | Taxable supplies above R120,000 a year (raised from R50,000) |
Two details matter:
- “Taxable supplies” means standard-rated (15%) plus zero-rated (0%) sales. Exempt supplies — financial services, residential rent, school fees — don’t count, even if they’re most of your income.
- Compulsory registration is immediate: you must apply within 21 business days of the day your turnover crosses R2.3 million. There’s no grace period to “think about it” — SARS expects the application almost immediately.
If you’re already registered and your turnover has since dropped below R2.3 million, you may apply to deregister (form VAT123e) — but deregistration can trigger VAT on your business assets, so read our small-business guide first.
The registration process, step by step
1. Prepare your business details. You’ll need your registered entity name, trading name, physical and postal addresses, banking details, the nature of your business, and your SARS income tax number.
2. Apply on eFiling. Registration is done online through eFiling — log in, register your “Tax Types”, and complete the VAT101 application. SARS has been pushing businesses to use eFiling for VAT registration; applications by appointment at a SARS branch exist but are not the default anymore.
3. Confirm your filing cycle. SARS assigns the VAT category. Many vendors file every two months; other categories apply. For eFiling returns and payments, the deadline is generally the last business day of the following month, while other submission methods generally use the 25th with working-day adjustments.
4. Wait for approval. SARS aims to process registration applications quickly; you’ll be notified on eFiling when your vendor number is issued. It’s a different number from your income tax number, and it must appear on every invoice.
5. Use your approved effective date. Check SARS’s registration notice rather than assuming the application date is the start date. Apply 15% to standard-rated supplies, 0% to qualifying zero-rated supplies, and the appropriate treatment for exempt supplies. Issue compliant invoices.
What changes once you’re registered
- You charge 15% on standard-rated sales and add the VAT to your prices (unless you decide to absorb it — but then it comes out of your margin).
- You can claim input tax on VAT-bearing business purchases: stock, equipment, rent, software, professional fees. This is the main financial upside of registration.
- You file VAT201 returns for your assigned periods and meet the deadline for your filing and payment method. Keep supporting records for five years, or longer where required for an unresolved matter.
- Your invoices must meet SARS’s requirements and carry your vendor number. VAT may be shown separately or through a qualifying inclusive-total statement with the rate. See VAT-inclusive vs exclusive pricing.
The mechanics of the return — and what happens when you’re late — are covered in how VAT works.
Should you register voluntarily?
If you’re between R120,000 and R2.3 million, registration is your choice. It pays when:
- Your customers are VAT-registered businesses. Where input-tax conditions are met, R1,150 including VAT can have an effective cost of R1,000 after a R150 input deduction. That is not a blanket 15% discount on the inclusive price.
- Your purchases carry a lot of VAT. The input tax you claim back can exceed what you collect, producing refunds — common for exporters and capital-intensive businesses.
- You want the credibility. Some clients and tenders prefer suppliers with vendor numbers.
It costs when:
- Your customers are consumers. For them your prices rise by 15% overnight, and you can’t reclaim that from the customer if your market won’t accept higher prices.
- Your expenses are mostly VAT-free — salaries don’t carry VAT, so if your costs are largely labour, there’s little input tax to offset.
- You dislike the admin. Returns every two months, five-year records, audits. For a micro-business that’s a real cost.
After the application: first return and common pitfalls
- File and pay on time. Confirm the deadline for your submission method from the first period. Late payment can attract a 10% penalty and interest at the applicable prescribed rate.
- Don’t claim input tax without invoices. A supplier who isn’t registered can’t give you a tax invoice, and without one there’s usually no claim — SARS allows a limited “notional” input tax deduction for supplies from unregistered suppliers, but the conditions are strict and the paperwork heavy. The rule of thumb: no tax invoice, no claim.
- Charge the right rate. Zero-rated basic foodstuffs and exports carry 0%; exempt supplies (financial services, residential rent, school fees) carry no VAT at all. 15% isn’t a default, it’s a category.
- Watch the 21-business-day clock on the way up. Growth is the happy problem — but the month your turnover crosses R2.3 million, the application clock starts.
Where to verify
- SARS — Value-Added Tax — registration rules and the VAT 404 guide for vendors.
- SARS — Budget 2026 FAQs — the confirmed R2.3 million and R120,000 thresholds.
- SARS — Small Business Taxpayers — how the new thresholds interact with Turnover Tax.
Work out what VAT will do to your prices with the VAT calculator, and check whether registration is actually right for your business in our guide on VAT for small businesses.