Compliance6 min read
VAT registration for contractors: the 2026 threshold change
What the move from R1 million to R2.3 million means for South African contractors, when you must register, when it can still make sense to register voluntarily, and how VAT changes your quotes.
- Updated
- 18 Oct 2026
- Facts checked
- 18 Oct 2026
- Sources
- 5 listed
In short
If you read nothing else.
- 01
SARS applies a compulsory VAT registration threshold of R2.3 million from 1 April 2026, up from R1 million, subject to legislation.
- 02
The voluntary threshold moved from R50,000 to R120,000. The VAT rate stays at 15%.
- 03
Being registered or not changes how you quote. Say which you are on every quote.
In this guide5 sections +
What changed
The change was announced in the Budget of 25 February 2026. SARS has applied the new thresholds to registrations and deregistrations from 1 April 2026, and says the change will apply retrospectively once the legislation is promulgated. Vendors who are already registered are not deregistered automatically.
The VAT rate is still 15%. Increases to 15.5% and 16% proposed in the March 2025 Budget were withdrawn in April 2025.
Do you have to register?
Registration is compulsory once your taxable supplies exceed the threshold in any consecutive 12 months, or when you expect them to in the next 12 months under a written contract. Count the value of what you invoice, not what you have been paid, and look at any rolling 12 months, not only the tax year. Contractors often cross the line in a single large job.
Try it with your numbers
Job price calculator, with or without VATFree, runs in your browser, nothing is stored.
When registering voluntarily can still make sense
- Most of your customers are VAT vendors, such as main contractors and businesses, and can claim the VAT back.
- You buy a lot of materials or equipment and want to claim the input VAT.
- A main contractor or tender requires VAT registration.
It usually makes less sense when most of your work is for homeowners, who cannot claim VAT back, because your price to them goes up by 15%. Being registered also means bi-monthly returns and stricter invoicing. Discuss the choice with your tax practitioner.
How VAT changes a quote
- If you are registered, quote the price excluding VAT, the VAT, and the total. Show your VAT number on every tax invoice.
- If you are not registered, do not charge VAT and do not show it. Say on the quote that you are not a VAT vendor.
- Price from cost excluding VAT if you can claim input VAT back, and including VAT if you cannot.
Returns and payment
Most small vendors file every two months, on a cycle SARS assigns. The VAT201 and payment are due by the 25th of the month after the period ends, or the last business day of that month if both are done on eFiling. Monthly filing becomes compulsory once taxable supplies exceed R30 million a year.
Try it with your numbers
Job price calculator, with or without VATFree, runs in your browser, nothing is stored.
Sources
- 01SARS: Budget 2026 frequently asked questions
- 02SARS: VAT Connect, issue 21 (September 2026)
- 03SARS: Value-Added Tax rates
- 04SARS: Tax periods for VAT vendors
- 05SARS: Guide to completing the VAT201 return
Sources checked 18 Oct 2026. Rules and thresholds change; confirm before you rely on them.
General information, not advice. This guide explains the general position for South African businesses. It is not tax, legal or accounting advice. For your specific situation, speak to your accountant, registered tax practitioner or attorney.