This is a meaningful shift for small and growing South African businesses. Many sole proprietors, freelancers and small traders who would previously have had to start charging VAT and filing VAT201 returns can now stay outside the VAT system for longer, reducing admin. Some businesses still choose to register voluntarily anyway, since it lets them reclaim VAT paid on equipment, stock and services.
Source: SARS
Frequently Asked Questions
At what turnover must a business register for VAT?
Once annual taxable turnover exceeds R2.3 million, VAT registration becomes compulsory.
Can a business register for VAT before reaching that threshold?
Yes — voluntary registration is available once turnover exceeds R120,000 a year.
Why would a small business choose to register voluntarily?
To claim back the VAT it pays on business purchases, which can improve cash flow, though it also means charging VAT on sales, which can affect pricing against non-registered competitors.