How to Register for VAT in South Africa 2026: Voluntary vs Compulsory Explained

From 1 April 2026, the rules for VAT registration in South Africa changed materially. The compulsory registration threshold — unchanged for 17 years — moved from R1 million to R2.3 million. The voluntary registration threshold moved from R50,000 to R120,000. If you are running a business and wondering whether you need to register, whether voluntary registration is worth it, or how the process actually works, this guide covers everything you need.

The 2026 thresholds — what applies now

VAT registration is mandatory if your taxable supplies exceed or will exceed R2.3 million in any consecutive 12-month period. Voluntary registration is available if turnover exceeds R120,000.

These thresholds apply from 1 April 2026. Before that date, the compulsory threshold was R1 million and the voluntary threshold was R50,000. If your business was previously compulsorily registered on turnover between R1 million and R2.3 million, see our dedicated article on what the threshold change means for existing VAT vendors.

Compulsory registration — when you have no choice

It is compulsory for a person to register for VAT if the value of taxable supplies made or to be made is in excess of R2.3 million in any consecutive 12-month period. An application for a compulsory VAT registration must be made within 21 business days from the date the threshold is or will be exceeded.

Note the word “consecutive” — this is not a calendar year calculation. SARS monitors any rolling 12-month window. If your taxable supplies cross R2.3 million in, say, the period from August 2025 to July 2026, your registration obligation is triggered in July 2026 even though it straddles two calendar years.

There is also a contract-based trigger: where in terms of a written contractual obligation, the value of taxable supplies to be made in a 12-month period will exceed R2.3 million, registration is compulsory. If you sign a contract that will take you over the threshold even before your actual turnover reaches it, you must register within 21 business days of signing.

The 21-day deadline is firm. Late registration attracts penalties and backdated VAT liability. If you crossed the threshold and did not register in time, address this urgently — SARS can and does identify unregistered vendors through data matching.

Voluntary registration — should you register below the threshold?

Voluntary registration is available to businesses whose taxable supplies exceed R120,000 per year but have not yet crossed R2.3 million. Whether you should register voluntarily depends on your specific business model.

When voluntary registration makes sense

You are a B2B business. If your clients are registered VAT vendors themselves, they can claim back the VAT you charge them as input tax. Being VAT-registered makes you commercially neutral to corporate clients — and in some industries, being unregistered raises questions about your scale and legitimacy.

You have significant input VAT costs. If your business buys goods, equipment, or services on which VAT is charged, voluntary registration allows you to claim that VAT back from SARS. For businesses with substantial input costs — a manufacturer buying materials, a tradesperson buying tools — the input tax recovery can be material.

You want to tender for government or large corporate contracts. Many procurement processes look more favourably on VAT-registered vendors, and some specifically require VAT registration for contracts above certain values.

When voluntary registration may not make sense

You are primarily B2C. If your customers are individuals who cannot claim input VAT, being VAT-registered means you either absorb the 15% yourself (reducing your margin) or add it to your price (making you more expensive than unregistered competitors).

Your administrative capacity is limited. VAT registration means filing VAT201 returns every one or two months, maintaining detailed records of all taxable supplies and input purchases, and issuing compliant tax invoices. The compliance burden is real.

Your margins are thin and turnover is modest. The compliance cost of VAT administration — whether in your own time or paid to an accountant — may outweigh the input tax recovery benefit for very small businesses.

Documents you need before you start

For a company (Pty) Ltd, prepare the following before beginning your eFiling application:

• CIPC certificate of incorporation and company registration number
• Certified copies of ID documents of all directors
• Proof of business address — a lease agreement, utility bill in the company's name, or a municipal rates account
• Bank confirmation letter or bank statement showing the company's account details, in the company's name
• Proof of taxable supplies — invoices issued to customers, signed contracts, or a letter of intent showing expected turnover
• Copy of the resolution appointing the public officer of the company
• Tax compliance status of both the company and the public officer — where a public officer is non-compliant, SARS will reject the VAT registration application

For voluntary registration, you also need proof that your taxable supplies have exceeded R120,000 in the past 12 months, or credible evidence that they will exceed this in the next 12 months.

How to register on SARS eFiling — step by step

Step 1 — Log in to SARS eFiling. Go to sarsefiling.co.za and log in with your company's eFiling credentials. If your company is not yet registered on eFiling, register first using your company's income tax reference number.

Step 2 — Navigate to VAT registration. On eFiling, navigate to Returns > VAT > Register for VAT. Select whether this is a compulsory or voluntary registration.

Step 3 — Complete the VAT101 form. Complete the VAT101 form with your business details, banking information, and expected turnover. Key fields include your trading name, business address, nature of business, accounting basis (invoice or payments basis), and your VAT tax period.

Step 4 — Upload supporting documents. Upload proof of business address, bank confirmation letter, ID copies of directors, CIPC registration certificate, and proof of taxable supplies.

Step 5 — Submit and await processing. SARS typically processes VAT registrations within 1 to 21 business days. You will receive your VAT number via eFiling. SARS may ask you to come in person to a SARS office — if this happens, book an appointment via the SARS eBooking system.

Invoice basis vs payments basis — which to choose

Invoice basis (the default): You account for output VAT when you issue an invoice, regardless of whether the customer has paid. You claim input VAT when you receive a tax invoice from a supplier, regardless of whether you have paid them yet. Most businesses use this basis.

Payments basis: You account for output VAT only when you actually receive payment from the customer. You claim input VAT only when you actually pay the supplier. This is available to vendors with taxable supplies below R2.3 million per year and is particularly useful for businesses with slow-paying clients.

Your obligations once registered

Charge VAT on all taxable supplies at 15%. Every invoice must include 15% VAT with compliant tax invoices including your VAT registration number, the buyer's details, a description of the supply, the VAT amount, and the total including VAT.

File VAT201 returns regularly. Most small businesses file bi-monthly. The return and payment are due on the last business day of the month following your VAT period. eFiling extends this to the 25th of that month.

Maintain detailed records. Keep copies of all tax invoices issued and received, your VAT201 returns, and payment confirmations for at least five years.

Notify SARS of changes. If your business address, banking details, or representative vendor changes, update SARS via eFiling's Maintain SARS Registered Details immediately.

The penalty for late registration

If your turnover crosses R2.3 million and you do not register within 21 business days, SARS will backdate your registration to the date the threshold was crossed — meaning you owe VAT on all supplies made since that date, plus a 10% penalty on the outstanding VAT, plus interest at 10.25% per annum.

The SARS eFiling system only allows backdating up to 6 months. If the backdating is more than 6 months, you must visit a SARS branch with supporting documents.

Frequently asked questions

What is a VAT registration number and where must it appear?

A VAT registration number is a unique 10-digit number starting with 4, assigned by SARS to registered vendors. It must be shown on all tax invoices over R5,000 and is used for all VAT reporting and compliance.

Can I register for VAT before I start trading?

Yes, under certain conditions. SARS allows voluntary registration for businesses that have not yet traded if they carry on a qualifying enterprise and can demonstrate a reasonable expectation of reaching the R120,000 voluntary threshold.

How long does VAT registration take?

SARS typically processes VAT registration applications within 1 to 21 business days via eFiling. Applications that trigger SARS's risk engine take longer — sometimes several weeks.

Can my accountant register on my behalf?

Yes, a registered tax practitioner with a power of attorney can submit the application on your behalf via eFiling.

What is zero-rated vs exempt VAT?

Zero-rated supplies are taxable supplies charged at 0% VAT — the vendor charges no VAT but can still claim input VAT on related purchases. Exempt supplies are not subject to VAT at all and the vendor cannot claim input VAT on related purchases.