One of the biggest changes for small businesses in Budget 2026 was the increase in the VAT registration thresholds, which took effect on 1 April 2026. For many owner-managed businesses, this changes the question of whether to register for VAT at all.
The new thresholds
| Registration type | Before 1 April 2026 | From 1 April 2026 |
|---|---|---|
| Compulsory (taxable supplies in any 12-month period) | R1 million | R2.3 million |
| Voluntary (minimum taxable supplies) | R50 000 | R120 000 |
The turnover tax ceiling for micro businesses also increased to R2.3 million, and its rate bands were adjusted for the first time since 2009. The standard VAT rate stays at 15%.
If you are not yet registered
You must register within 21 business days once your taxable supplies exceed R2.3 million in a 12-month period, or once you reasonably expect them to. Below that, registration is optional from R120 000.
Voluntary registration can still make sense when:
- Most of your customers are VAT-registered businesses that can claim the VAT back.
- You have large VAT-able start-up costs, such as equipment, that you want to claim.
- Large clients or tenders expect suppliers to be VAT vendors.
It usually makes less sense if you sell mainly to consumers, because adding 15% to your prices may make you less competitive.
If you are already registered
Being below the new threshold does not cancel your registration automatically. You may be able to apply to deregister, but think carefully first. Deregistration can trigger an exit VAT charge on the assets you hold, and re-registering later takes time.
This article is general information based on the law and SARS guidance as at 1 October 2026. It is not tax or legal advice for your specific situation. Please contact us before acting on it.
