It's a rolling 12 months — not your financial year
This is the point that trips people up. SARS does not test the threshold against your financial year or the calendar year. It looks at any consecutive 12-month period. In practice you must watch a rolling total: at the end of any month, add up the taxable supplies of the previous twelve months. The moment that running total goes over R2.3 million, the compulsory-registration clock starts — even if it happens in the middle of your year, and even if a single strong quarter pushed you over.
There is also a forward-looking trigger: if you have a written contract or clear grounds showing taxable supplies will exceed R2.3 million in the next 12 months, registration becomes compulsory on that basis too.
What counts as “taxable supplies”
Add up the taxable turnover of the enterprise. That means:
- Standard-rated supplies (15%) — included.
- Zero-rated supplies (0%) — included (exports, certain basic foods, etc. still count towards the threshold).
- Exempt supplies — not included. Residential rental, financial services and certain educational services are exempt and do not push you towards registration.
Because zero-rated turnover counts, a business selling mostly zero-rated goods can be required to register even though it charges little or no output VAT.
You have 21 business days to apply
Once your taxable supplies exceed R2.3 million in any 12-month window, you must apply to SARS within 21 business days. Missing that window can attract penalties and interest, and you can be held liable for output VAT on the supplies you made after the threshold was crossed — whether or not you actually charged it to customers. If you think you are close, it is worth checking the rolling total every month rather than at year-end.
The “I'm between R1 million and R2.3 million” case
If you registered under the old R1 million threshold and now sit below R2.3 million, the new, higher threshold does not deregister you automatically — you remain a registered vendor unless you actively apply to cancel.
Deregistration is possible, but it carries a real consequence: SARS treats deregistration as a deemed supply, meaning output VAT can become payable on the business assets you still hold at exit (stock, equipment, and so on), as if you had sold them. That can be a meaningful one-off cost. Whether staying registered or deregistering is better depends on your input-tax position, your customers (VAT-registered clients often prefer a VAT invoice), and your asset base. This is a decision to take with an accountant — the right answer is specific to your business, and this page does not advise you either way.
Turnover Tax also moved to R2.3 million
Separately, the Turnover Tax regime — a simplified single tax for very small businesses that replaces VAT and income tax for those who qualify — has its qualifying turnover aligned at R2.3 million. It is a different regime from VAT; most VAT-registered businesses are not on Turnover Tax, but if you are near the threshold it is worth knowing both moved together.
Work the numbers
Once you know you need to charge VAT, the South Africa VAT calculator adds or removes 15% instantly, and the free invoice generator produces a compliant VAT invoice with the tax shown as a separate line. Both are free and run in your browser.
A note on the effective date
The new thresholds are carried in clause 20 of the 2026 Draft Rates and Monetary Amounts Bill, announced in the Budget Speech on 25 February 2026 and deemed effective 1 April 2026. SARS has published and confirmed the figures on its VAT and Budget 2026 pages. We state the effective date plainly; the Bill follows the normal parliamentary process, so treat 1 April 2026 as the operative date SARS is applying rather than a claim that the Bill's passage is finalised.