A business must register for VAT once its taxable turnover in any consecutive 12-month period exceeds the statutory threshold, or is reasonably expected to. This is compulsory, not optional.
What it means
Once the threshold is crossed, the business has a limited window to register with SARS. Trading as a VAT vendor without registering when required is a compliance failure that can attract penalties and interest on VAT that should have been charged.
Where it fits in
This threshold also marks the point where turnover tax, the simplified tax regime for very small businesses, stops being available, since turnover tax has its own, lower turnover ceiling. Crossing into compulsory VAT registration usually means leaving turnover tax behind as well.
Key rules
- Compulsory once taxable turnover crosses the statutory threshold in a 12-month period.
- Must register within the window SARS prescribes after crossing it.
- Distinct from voluntary registration, which is a choice made below the threshold.
- Turnover tax eligibility falls away once this threshold is crossed.
