When a South African business must register for VAT
The R2.3 million compulsory VAT registration test in South Africa from April 2026, the 21-business-day deadline, and how to watch your rolling 12 months.
By Achekam · · 4 min read · For Running a business businesses in South Africa
For years the number every growing South African business watched was R1 million. Cross it, and VAT registration became compulsory. That number has changed, and the change gives many small businesses more room before they must register. It does not change the way the test works, and the way the test works is what catches people out.
This guide sets out the new threshold, the test SARS applies, the deadline to apply once you cross it, the supplies that do not count, and how to watch the figure from your own books.
The threshold is now R2.3 million
SARS's VAT page says that, as announced in the 2026 Budget Speech, the compulsory VAT registration threshold increased from R1 million to R2.3 million with effect from 1 April 2026. Older material, including some SARS guides and an earlier news item on the same page, still quotes R1 million, so check the date of anything you read. These are the figures at the time of writing.
The test: any consecutive 12 months, or a written contract
SARS says it is compulsory to register for VAT where the value of taxable supplies made in any consecutive 12-month period exceeded or is likely to exceed R2.3 million, or where a written contract shows that taxable supplies in a 12-month period will exceed R2.3 million.
Three features of that test matter:
- Any consecutive 12 months. It is not your financial year and not the tax year. It is any rolling 12-month window, so a strong six months can push you over even if last year's annual figure was well below the line.
- Exceeded or likely to exceed. Looking forward counts. If your order book makes it likely you will pass the threshold in the coming months, the duty can arise before the sales are made.
- A written contract. A single signed contract that shows taxable supplies over R2.3 million in 12 months is enough on its own.
A worked example in words: a small engineering firm has sold well under the threshold in each of its financial years. In August it signs a written maintenance contract worth more than R2.3 million over the next 12 months. The contract alone brings it within compulsory registration, even though its past sales never came close, and the 21 business days to apply should be counted with that contract in mind.
21 business days to apply
SARS says an application for compulsory registration must be made within 21 business days from the date the R2.3 million threshold is or will be exceeded. SARS's VAT registration page explains who may and who must register and how to apply.
SARS says the application must be made through eFiling or a virtual appointment, by telephone or video, booked through its eBooking system, and that where no risk is identified it issues a VAT number immediately. Have your registration documents, bank details and evidence of your trading ready before you start, so a missing document does not push you past the 21 days. If the date has already passed, late VAT registration and backdating covers what follows.
Supplies that do not count
The test is about taxable supplies, not everything that comes into the bank. SARS's VAT 404 guide says a person that makes only exempt supplies may not register for VAT at all, and that a registered vendor may not deduct VAT on goods or services acquired to make exempt supplies or for private use.
So a business whose income is entirely exempt is outside VAT however large it grows. A business with a mix of exempt and taxable income should look at the taxable part when applying the R2.3 million test, and take advice on how the two are separated. Loans received, capital introduced by the owners and other money that is not payment for a supply also need to be kept out of the figure.
Watching the rolling 12 months from your books
You cannot apply a rolling test from an annual report. If your books are in Achekam, management accounts show an income statement for any period you choose beside the period before, added up from the business's own journals, and the trial balance shows each account for all time, for a period or at a date. Run the income statement each month for the latest 12 months, not the year to date, and keep the result in a simple log.
That works best when income accounts are kept separately: taxable sales in one place, exempt income in another, and non-sales receipts out of income altogether. Then the 12-month taxable figure can be read straight from the report.
What Achekam does not check
One limit matters while you are below the threshold. Achekam does not check whether the business is VAT-registered before charging VAT on its documents. If you are not registered, make sure your invoices and quotes do not add VAT. Documents made by the server print a VAT registration number, and are titled Tax Invoice, only when a VAT number has been entered in Settings under Firm Profile. Invoicing before VAT registration explains how to issue invoices correctly in the meantime, and voluntary VAT registration covers registering before you have to.
A monthly threshold check
- Run the income statement for the latest 12 months.
- Take out exempt income and anything that is not a supply.
- Compare the taxable figure with R2.3 million.
- Look at signed contracts and the order book for the coming 12 months.
- If you have crossed, or are likely to, apply within 21 business days.
The month you cross the line is the month the clock starts. A short check each month means you will know which month that is.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
