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VAT Registration Threshold in South Africa (and How to Calculate 15% VAT)

Short answer: A business must register for VAT when its taxable supplies go above R2.3 million in a 12 month period. Voluntary registration is possible above R120 000. SARS announced these figures in Budget 2026, up from R1 million and R50 000.

Last checked 19/10/2026. Figures from SARS.

Check before you rely on this: the higher thresholds were announced in the February 2026 Budget. SARS says it is applying the R2.3 million compulsory figure from 01/04/2026 for new registrations and deregistrations, while the law change is still being finalised. Many older guides, including the VAT 404 guide, still show R1 million and R50 000. Confirm the current figure on the SARS website before you register or deregister.

Compulsory registration

If the total value of your taxable supplies goes above the compulsory threshold in any 12 month period, or is likely to, you must register for VAT. The figure SARS gives from 01/04/2026 is R2.3 million a year (it was R1 million).

Voluntary registration

You may choose to register once your taxable supplies pass the voluntary threshold, R120 000 a year per SARS's Budget 2026 FAQ (it was R50 000). SARS may ask for evidence, such as a written contract or proof of regular monthly supplies. Registering lets you claim input VAT on business costs, but you must then charge VAT and file returns on time.

How to calculate 15% VAT

The standard VAT rate is 15%.

  • Add VAT: price excluding VAT x 1.15. R1 000.00 becomes R1 150.00.
  • Take VAT out: price including VAT divided by 1.15. R1 150.00 includes R150.00 of VAT.
  • VAT amount from an inclusive price: price including VAT x 15 divided by 115.

What you pay SARS

For each tax period you work out output VAT (charged on your sales) minus input VAT (paid on business purchases that qualify, with a valid tax invoice) and file a VAT201 return. If input is higher than output, you can get a refund.

How OptiTax does this on WhatsApp

  1. Send a photo of each slip or invoice on WhatsApp and the VAT on it is read for you.
  2. Ask "how much VAT can I claim" for any period, or "how much VAT was on fuel last month".
  3. Use the figures when you complete your VAT201.

Start free on WhatsApp from R99 a month

Frequently asked questions

Do I have to register if I earn less than the threshold?

No. Registration is voluntary below the compulsory threshold, and once registered you must keep to the VAT rules.

Can I claim VAT on every purchase?

Only on business purchases you can support with a valid tax invoice from a VAT vendor. See our page on valid tax invoices.

Which threshold applies to me today?

Check the SARS VAT pages. The Budget 2026 figures are R2.3 million and R120 000, while older guides show R1 million and R50 000.

Sources

Related guides

Valid Tax Invoice: What SARS Needs on a Slip or InvoiceWhat must be on a tax invoice for a South African VAT vendor, the R5 000 and R50 rules, and what to do when details are missing.Provisional Tax (IRP6) Explained: Who Pays and WhenWhat provisional tax is, who must pay it, and the due dates for the 2027 tax year in South Africa.SARS Deadlines for Small Business, 2026/27Key SARS dates for small businesses and sole proprietors for the 2026/27 year, with links to the official SARS calendar.

All answers

General information, not tax advice. Check your own situation with SARS or a registered tax practitioner.