A Big VAT Threshold Change Has Landed… But Don’t Panic
From 1 April 2026, the VAT registration threshold in South Africa has officially increased from R1 million to R2.3 million. In simple terms, this means many small businesses are no longer required to be VAT registered. At first glance, this sounds like a win. Less admin. Less compliance. Less stress. And yes… in some cases, it can be. However, before making any decisions, it’s important to take a step back and look at the bigger picture. So… should you deregister for VAT? This is where things get a little more nuanced.
Just because you can deregister, doesn’t always mean you should. For some businesses, staying VAT registered is actually more beneficial in the long run.
Here’s why:
- You can claim VAT back on your expenses
- If your business has regular costs, this can make a noticeable difference to your cash flow.
- Furthermore, it can improve your business image
- Many clients, especially larger companies, prefer working with VAT-registered suppliers.
- Additionally, it helps with pricing flexibility.
Being VAT registered also allows you to structure your pricing more competitively in certain industries.
What About Businesses Already Registered?
If your business registered for VAT under the old R1 million threshold, everything you’ve done up to now is still completely valid. Moreover, your past VAT submissions, claims, and compliance all remain in place. Nothing gets reversed. There’s also no automatic deregistration — the choice to stay registered or deregister is entirely yours. For more official detail on VAT registration requirements, you can refer to the SARS VAT page.
The Part Most People Don’t Talk About
Here’s something that often catches businesses off guard. If you choose to deregister, SARS may require a final VAT calculation on certain assets or stock you still hold. In some cases, this can lead to an unexpected once-off VAT cost. Although it’s not always a deal-breaker, it’s definitely something that should be properly assessed before making a move.
The Truth About the VAT Threshold? There’s No One-Size-Fits-All Answer
Every business is different. What works perfectly for one company could quietly cost another. That’s why decisions like this should always consider:
- Your expenses and input VAT
- Your type of clients
- Your long-term growth plans
How PATC Can Help With the VAT Threshold Decision
This is exactly where we step in. At PATC, the approach is simple: no guesswork, no assumptions. Instead, we offer clear, practical guidance tailored to your business. We can run the numbers with you and help answer the key question: will deregistering actually save you money… or cost you more? If you’d like a broader view of your tax obligations, you can also explore our tax services page.
This VAT threshold increase is a positive change. Overall, it gives businesses more flexibility. But the real value lies in making the right decision for your situation, not just the easiest one.
Contact Us
At PATC, your first 1-hour consultation is always free (T&C’s apply). Whether you’re a new client wanting to discuss your tax position or need guidance on the VAT threshold change, we’re happy to have that initial conversation at no cost.
