The South African Revenue Service (SARS) has clarified how the increased VAT registration thresholds will apply from 1 April 2026, including the treatment of existing VAT registrations and deregistration requests.
South Africa’s South African Revenue Service (SARS) has clarified how the increased VAT registration thresholds will apply from 1 April 2026, confirming that the higher compulsory registration threshold is being used for new registration and deregistration requests, but VAT registrations will not be automatically cancelled.
The clarification was included in VAT Connect Issue 21, published on 8 September 2026, following changes announced in the 2026 Budget Speech and subsequently enacted.
Increased registration thresholds
The compulsory VAT registration threshold increased from ZAR 1 million to ZAR 2.3 million per annum, while the voluntary registration threshold increased from ZAR 50 000 to ZAR 120 000 per annum, with effect from 1 April 2026.
The changes were introduced to give smaller businesses more scope to grow without immediately facing the administrative and compliance costs associated with VAT registration.
Although the amendments were proposed to apply retrospectively from 1 April 2026, SARS said it was applying the new compulsory registration threshold to new registration and deregistration requests.
However, SARS is not automatically cancelling existing VAT registrations where vendors fall below the new threshold.
Once the legislation was promulgated, SARS could initiate cancellations for vendors below the new voluntary threshold, provided the affected vendors were notified.
VAT amendments
SARS also highlighted several other VAT amendments that took effect on 1 April 2026. These include provisions covering refunds to foreign electronic services suppliers on deregistration, interest on delayed VAT refunds, VAT modernisation and the treatment of electronic services supplied through intermediaries.
Other changes address short-term insurance, debit- and credit notes in going concern and reorganisation transactions, zero-rated silver exports, testing services supplied to non-residents, temporary letting of residential property by property developers and airtime vouchers used outside South Africa.
The amendments also removed VAT relief for certain low value imports and clarified the VAT treatment of national housing programme payments and supplies made by educational institutions and public schools.
The revised thresholds and related VAT amendments form part of South Africa’s broader efforts to simplify VAT administration, reduce compliance burdens and modernise the VAT system. SARS has said the changes will also support more consistent VAT treatment across affected transactions and improve the administration of the tax.
