South African SMEs should reassess their VAT position after the publication of SAICA’s updated VAT Registration FAQs on 27 October 2026. The practical question is not only whether a business has crossed the compulsory registration threshold, but also whether its turnover records, contracts and SARS registration details support the position it is taking.

SARS is currently administering the increased VAT thresholds announced for 1 April 2026, while noting that related legislative amendments and regulations are still being updated. Businesses should therefore distinguish between the current administrative position and the final legal wording when reviewing their obligations. SARS’s VAT registration guidance should be checked before an application, deregistration request or retrospective correction is submitted.

What changed for VAT registration?

From 1 April 2026, the compulsory VAT registration threshold increased from R1 million to R2.3 million in taxable supplies over any uninterrupted 12-month period. The voluntary registration threshold increased from R50 000 to R120 000. These thresholds apply to taxable supplies and should not be confused with net profit or cash received.

A business may be required to register where its taxable supplies have exceeded R2.3 million in a rolling 12-month period, or where a written contract reasonably indicates that the threshold will be exceeded. SARS states that compulsory registration applications must generally be made within 21 business days after the liability arises. SARS’s VAT FAQ also confirms that voluntary registration may be available where taxable supplies exceed R120 000 in the relevant prior period.

Who should review their position?

The change is particularly relevant to businesses that previously exceeded the old R1 million threshold but remain below R2.3 million. SARS says these businesses may no longer be required to register compulsorily from 1 April 2026, although the consequences of remaining registered or seeking deregistration must be considered carefully.

SARS’s guidance warns that deregistration can have tax consequences, including deemed output tax in certain circumstances. A business should not cancel its VAT registration simply because its turnover has fallen below the new compulsory threshold. It should first consider whether it still has taxable supplies, whether customers expect VAT invoices, whether input tax claims remain material and whether a future contract could push turnover above the threshold.

What businesses should check now

  • Calculate taxable supplies over each uninterrupted 12-month period, rather than relying only on annual accounting turnover.
  • Separate standard-rated, zero-rated, exempt and non-taxable amounts in the accounting records.
  • Review signed contracts, purchase orders and recurring revenue commitments that may indicate future threshold exposure.
  • Confirm that the VAT liability date and SARS registration details agree with the underlying invoices and financial records.
  • Keep supporting schedules for turnover calculations, especially where the business is close to R2.3 million or R120 000.

Practical next steps

Finance teams should prepare a short VAT registration assessment for management approval. This should show the rolling 12-month taxable-supply calculation, the treatment of major contracts, the expected effect on pricing and cash flow, and whether voluntary registration remains commercially useful.

Businesses considering registration, deregistration or a correction to their liability date should obtain professional advice before acting. The Your Financial Partner services team can assist with reviewing accounting records and preparing a practical compliance checklist.