The VAT registration threshold changed in 2026 — here's what it means for your business

What actually changed

In the 2026 Budget Speech, delivered on 25 February 2026 by Finance Minister Enoch Godongwana, government announced an increase to the VAT registration thresholds — described as the first increase since 2009.

Effective 1 April 2026:

• The compulsory VAT registration threshold increased from R1 million to R2.3 million.
• The voluntary VAT registration threshold increased from R50,000 to R120,000.

That's a substantial move. A business turning over, say, R1.5 million a year — which would have been legally required to register for VAT under the old rules — is no longer obliged to register at all under the new threshold.

The rate itself hasn't changed

It's worth being precise here, because VAT has been in the headlines for other reasons too: the standard VAT rate remains 15%. A proposed increase to 15.5% and then 16% was announced and then reversed. So nothing has changed about how much VAT costs once you're registered — only the point at which registration becomes compulsory.

The 21-business-day registration rule still applies

If your turnover exceeds — or you reasonably expect it to exceed — the compulsory threshold, the clock is running. Application for compulsory VAT registration must be made within 21 business days from the date the threshold is or will be exceeded. This part of the process hasn't changed — only the number that triggers it has moved from R1 million to R2.3 million.

A word of caution on timing

SARS's own Legal Counsel guide page notes that related VAT guides “will be updated in due course once the 2026 Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill is promulgated.” In other words, while SARS's live VAT page, its FAQ, its Monthly Tax Digest commentary, and major professional-services firms are unanimous that the new thresholds are in effect from 1 April 2026, the underlying enabling legislation should be reconfirmed as final before you make a once-off, high-stakes decision based on it — particularly if you're right on the boundary. This is exactly the kind of detail we check for clients rather than leave to a generic guide.

What this actually means if you run a small business

Here's the honest, practical read — not the marketing version.

If your turnover sits between R1 million and R2.3 million: you were compulsorily VAT-registered before, and now you're not required to be. That doesn't automatically mean you should deregister — VAT registration affects your pricing, your input tax claims on business expenses, and how your business looks to bigger clients who prefer dealing with VAT-registered suppliers. It's worth weighing this up rather than reflexively deregistering.

If your turnover sits between R120,000 and R2.3 million: you now fall into the voluntary registration band. Voluntary registration can still make sense even though it's optional — particularly if:

• most of your customers are VAT-registered businesses that can claim back the VAT you charge them, so it costs them nothing extra;
• you have significant input VAT on equipment, stock, or services that you'd like to claim back; or
• you're preparing to grow past the compulsory threshold soon anyway, and want your systems and pricing already VAT-ready.

If your turnover is under R120,000: you're below even the voluntary threshold and VAT registration isn't available to you on a standard voluntary basis.

The right answer depends on your margins, your customer base, and your growth plans — this is a case where a blanket rule of thumb can cost you money in either direction.

Key takeaways

• Compulsory VAT registration threshold: R1 million → R2.3 million, effective 1 April 2026.
• Voluntary VAT registration threshold: R50,000 → R120,000, effective the same date.
• This is the first change to these thresholds since 2009.
• The standard VAT rate is unchanged at 15%.
• Compulsory registration must still be applied for within 21 business days of exceeding the threshold.
• Voluntary registration can still be the smarter choice for many small businesses, depending on your customer base and input costs.

Frequently asked questions

Sources

• SARS — Value-Added Tax
• SARS FAQ — What is the new Threshold for VAT Registration?
• SARS — VAT Legal Counsel Guide page
• SARS — Register for VAT
• KPMG — South Africa VAT threshold increase