SARS Urges Schools to Apply for VAT Deregistration in 2026 — What This Means for Your Institution
If Your School Is Still Registered as a VAT Vendor, SARS Wants You to Act Now
On 7 August 2026, the South African Revenue Service issued a direct media release calling on schools registered under the South African Schools Act — and currently registered as VAT vendors — to apply for VAT deregistration. This is not a suggestion. When SARS issues a public call to action of this kind, it signals that enforcement is coming for those who ignore it.
If you manage, govern, or advise a public or independent school in South Africa and that school is registered as a VAT vendor, you need to read this carefully. Getting this wrong carries real financial and legal risk.
What SARS Is Actually Saying About VAT Deregistration for Schools
SARS's message is straightforward: schools registered under the South African Schools Act that are currently registered as VAT vendors should apply to deregister from VAT. The announcement, published in August 2026, is targeted specifically at this category of institution.
Schools registered under the South African Schools Act are typically public schools and independent schools that operate under a statutory framework designed for educational institutions rather than commercial enterprises. The VAT Act in South Africa requires vendors to register if they make taxable supplies above the mandatory registration threshold — currently R1 million in a 12-month period. However, many schools either do not meet this threshold or make supplies that are exempt or outside the scope of VAT altogether.
The problem SARS is addressing is this: a number of schools registered as VAT vendors years ago — possibly when they were receiving grants, running tuck shops, or generating other income — and never deregistered, even after those activities changed or ceased. Remaining registered as a VAT vendor when you should not be creates ongoing compliance obligations. You must file returns, declare output tax, claim input tax correctly, and remain subject to VAT audits. If you fail to meet those obligations, penalties and interest accumulate.
Who Is Affected by This VAT Deregistration Call
This directive applies specifically to schools registered under the South African Schools Act. That covers two main categories. First, public schools — those established and maintained by provincial government departments of education. Second, independent schools — privately owned schools that are registered and partially subsidised under the same Act.
If your school is registered under a different legal framework — for instance, a private training provider registered under the Skills Development Act, or a higher education institution under the Higher Education Act — this specific SARS call does not apply to you directly. However, it is still worth reviewing your VAT registration status with a tax practitioner, because the underlying principle is the same: if you are registered for VAT but should not be, you face unnecessary risk.
School governing bodies, school finance committees, and business managers need to be the ones acting here. In many public schools, there is limited administrative capacity to manage ongoing SARS obligations, which makes incorrect or lapsed VAT registrations particularly dangerous.
What Happens If a School Ignores This and Stays Registered Incorrectly
Staying registered as a VAT vendor when SARS has signalled you should deregister creates multiple compounding risks.
Outstanding VAT returns attract penalties. Under the Tax Administration Act, failure to submit a VAT return on time results in an administrative penalty. For VAT, this is a fixed-amount penalty that increases the longer the return remains outstanding. A school that has not submitted VAT returns for several periods could face penalties across each outstanding period simultaneously.
Interest accrues on unpaid VAT. If SARS determines that output tax was due and was not declared or paid, interest accrues at the prescribed rate from the date the amount was due. Given that some schools may have been incorrectly registered for years, backdated liability could be substantial.
VAT audits and verifications become more likely. SARS actively uses data matching and risk profiling. A school that is registered as a VAT vendor but is not submitting returns, or submitting nil returns inconsistently, is likely to be flagged. An audit triggered in this way can extend well beyond VAT and draw scrutiny to other aspects of the institution's financial affairs.
Responsible persons face personal exposure. The Tax Administration Act enables SARS to hold individual responsible persons — which can include school principals, governing body members, and finance staff — personally liable for outstanding tax debt in certain circumstances. This is not a theoretical risk; it has been applied against individuals in South African institutions.
The rand amounts at stake depend on how long the incorrect registration has persisted and whether any VAT was actually due and undeclared. But even a school with zero actual VAT liability can accumulate tens of thousands of rands in administrative penalties simply by failing to submit returns on time over multiple periods.
How VAT Deregistration Works — The Basics
VAT deregistration is not automatic. A registered vendor must apply to SARS to be removed from the VAT register. The application must be submitted and SARS must approve it. Simply stopping the submission of VAT returns is not deregistration — it is non-compliance, and it will generate penalties.
To deregister, the school (or its representative) submits a VAT123 form to SARS. This can be done through a SARS branch or, in some cases, through SARS eFiling. Before SARS approves the deregistration, they will typically require that all outstanding returns are filed and all outstanding debt is settled or a payment arrangement is in place.
This means that for schools that have accumulated outstanding returns, the deregistration process requires cleaning up the compliance history first. That is work that requires a registered tax practitioner — someone who knows how to engage SARS, manage the outstanding return submissions, and negotiate any debt that has arisen from penalties and interest.
Schools should not attempt to navigate this alone. The process is procedurally straightforward when accounts are clean, but complicated when there is a history of non-submission. A registered tax practitioner or chartered accountant with SARS experience is the right professional for this.
What Schools Need to Do Right Now About VAT Deregistration
Act in this order. First, establish whether your school is actually registered as a VAT vendor. If you are unsure, the principal or finance manager can check the school's tax compliance status on SARS eFiling using the institution's login credentials. If you do not have access to eFiling, a registered tax practitioner can verify this for you.
Second, if the school is registered as a VAT vendor, check the status of all VAT returns. Are they up to date? Are there outstanding periods? Is there an outstanding balance? This information is available on eFiling.
Third, engage a registered tax practitioner or accountant as soon as possible. They will assess the full picture — outstanding returns, any liability, penalties and interest — and advise on the most efficient path to deregistration. In some cases, SARS will allow a remission of penalties if the taxpayer can demonstrate reasonable grounds for the failure to comply. That argument is stronger when you come forward proactively rather than after SARS initiates contact.
Fourth, once the registered practitioner has prepared the ground, submit the VAT123 deregistration application. Do not do this before outstanding returns are addressed — SARS is unlikely to approve deregistration while returns are outstanding.
Finally, once deregistration is confirmed, get written confirmation from SARS and file it. Keep it permanently. It is your evidence that the obligation has been correctly terminated.
VAT Deregistration Is Only One Part of a School's Tax Obligations
Sorting out VAT does not mean the school's tax obligations are settled. Public and independent schools still need to manage PAYE if they employ staff, submit annual returns to CIPC if they are structured as a non-profit company or similar entity, and comply with any income tax obligations that apply to their legal structure. Tax-exempt status under Section 10 of the Income Tax Act is not automatic — it must be applied for and maintained.
The SARS announcement is a prompt to get the full picture right, not just to tick one box.
Get Connected to the Right People to Handle This
ClearComply's free company check reads CIPC records — beneficial ownership, annual returns, and company status. It does not show VAT registration status or SARS standing. For VAT deregistration, you need a registered tax practitioner, and that is exactly who we connect you with.
If your school needs help working through the VAT deregistration process, or you simply are not sure where things stand with SARS, tell us what you need here and we will connect you with an accountant who handles this. There is no obligation, and acting now is considerably cheaper than waiting for SARS to contact you first.