Compliance

How to register for VAT in South Africa: Everything you need to know

Learn about the steps and requirements for registering for VAT, including information on thresholds, tax rates, and compliance.

Mar 26, 20268 min read Share

Three words every business owner dreads: Value Added Tax (VAT).

We see it on our till slips as the sneaky percentile added to the bill.

Truth is, it’s not sneaky at all and has existed for over 30 years.

There comes a time in a business’s growth journey when it needs to register for VAT.

And although it seems like a headache, we live in a time where innovation can lighten any load.

This article explores the rules and benefits of being a VAT vendor, and how to glide through the VAT submission process.

Here’s what we’ll cover:

What does it mean to be a VAT vendor? (VAT vendor meaning explained)

VAT replaced the General Sales Tax (GST) in 1991 and is an indirect tax charged for economic consumption.

It aims to levy the public on goods and services instead of their income or corporate profits.

The current standard VAT rate in South Africa is 15%.

VAT is only charged on taxable supplies made, i.e., supplies for which VAT is charged at either the standard rate (15%) or zero rate (0%).

Some goods or services are exempt from VAT.

A registered VAT vendor is responsible for levying VAT (output tax) on each client invoice and paying it to SARS.

Fortunately, SARS lets you reduce your VAT liability by deducting the input tax of the manufacturing or development of your product or service–i.e., you can reclaim the VAT you paid to other businesses.

For example, you charge R3,000–excluding VAT–for a service because it costs you R1,600 excluding VAT to develop it, and you want to make a decent profit of R1,400.

So, this is what your VAT calculation will look like:

• Output tax (VAT charged for the service): R3,000 x 15% = R450
• Input tax (VAT included in the cost of developing the service): R1,600 x 15% = R240
• Total VAT liability: Output tax (R450) – Input tax (R240) = R210

Note: Remember to detail your input and output tax when submitting your VAT return to SARS.

Make sense? Let’s move on.

When must a business register for VAT in South Africa?

VAT legislation only requires small businesses to register for VAT if the taxable supplies are over R1 million over 12 months.

You can also register for VAT voluntarily if your annual taxable supplies exceed R50,000 in any 12‑month period.

“But why would I voluntarily register for VAT if I don’t have to?”

Good question–and there’s good reason to:

• Yes, it’s more admin and compliance, but registering as a vendor means you pay less VAT overall as a business by claiming Input VAT you would not otherwise be entitled to as a non-vendor.
• Being a registered vendor enhances your credibility when doing business with others
• If you sell mostly zero-rated supplies, you can claim back the VAT on the standard-rated supplies you buy.
• If you have high capital expenditure, you can claim back the VAT charged for large expenses such as vehicles, equipment, or property.

Before you leap for joy, check if your supplies are zero-rated or exempt.

How to register for VAT

You can either register through eFiling, or you can make a virtual appointment with SARS.

How to register through eFiling:

• Step 1: Log into your eFiling profile

• Step 2: Navigate to SARS Registered Details on the left menu or under the “Organisations” tab

• Step 3: Select “Main SARS Registered Details” on the left menu and click on “I Agree” to confirm your authorisation

• Step 4: Navigate to “My tax products” > “Revenue”, and select “VAT” from the left menu

• Step 5: Click on “Add new product registration” or “Addition VAT branch registration”

• Step 6: Complete the form with your particulars, trading name, liability date, and business activity code

• Step 7: Follow the form and fill in the relevant boxes

Once you’ve submitted your VAT registration, SARS may ask for additional supporting documents or identity verification before issuing your VAT number.

If everything is in order, your VAT number may be issued within a few weeks.

If further checks are required, the process can take longer, so it’s important to respond promptly to any follow‑up requests.

VAT registration requirements in South Africa

Before registering for VAT, you’ll need to make sure you have the right information and documents ready.

SARS may ask for:

• your business registration details
• proof of business address
• bank account details in the business name
• identification for business owners or directors
• details of your taxable supplies and expected turnover

Other VAT rules to be aware of

As expected, you must comply with specific rules and deadlines.

Here are some tips:

• Check your cycle: There are specific deadlines related to each business. VAT201 returns and payments are generally due by the 25th day of the month following the end of the VAT period, or by the last business day of that month where submissions are made via SARS eFiling. Always confirm your applicable deadline.
• And don’t be late: Submitting or paying your VAT late can result in penalties and interest charged by SARS, which increase the longer the amount remains unpaid.
• Make space for VAT: Tax invoices for taxable supplies must reflect VAT correctly. Zero‑rated supplies should show VAT at 0%, while exempt supplies should not reflect VAT.
• Words matter: A valid tax invoice must contain the words ‘Tax Invoice’, ‘VAT Invoice’ or ‘Invoice’, as prescribed by the VAT Act.
• Don’t take chances: Inflating input tax claims to reduce your VAT liability is illegal.
• Match, don’t mix: Ensure the revenue on your statements matches what you’ve declared on your VAT returns.
• Commit to submitting: Keep submitting returns, even if there’s no VAT due.
• Information is key: Always include your VAT number, that of your customer (if they are registered), and the customer’s name and physical address on your invoices.
• No VAT uncharged: You must add VAT to any commission earned or paid.
• Debt relief: You can claim back any VAT already paid to SARS for invoices with irrecoverable bad debt.

How automation saves the day

There’s no way around paying relevant taxes and VAT.

The good news?

Automation can significantly reduce manual work when preparing VAT201 information and managing supporting records.

Sage Accounting Accountants Edition lets you prepare, submit and track VAT201 declarations through the SARS eFiling system–helping to reduce manual errors, rework, and time spent on administrative tasks.

Key benefits include:

• Easy integration: Simply select the ISV activation within Sage SARS eFiling, let the VAT 201 wizard help you integrate VAT amounts, and leave it to do its magic.

• Automation: Your submissions will upload automatically, reducing the need for manual processes while streamlining the compliance process.

• More time: Increased efficiency, reduced admin, and minimised errors allow you to advise customers and focus on growing the business.

• Legislative updates: The software is updated to reflect legislative changes, helping businesses stay informed as requirements evolve.

• Many functions, one solution: You can manage your customers, invoices, compliance, and processes from a central location, which means you don’t need confusing spreadsheets and sticky notes populating your system.

• Complete visibility: You can track the status of your submission from Sage Accounting and have all your customer, employee, and business data organised and ready to use when you need them.

FAQs

How long does it take to register for VAT in South Africa?

If you register for VAT online through SARS eFiling, it typically takes between 10 and 21 business days to receive your VAT number.

In some cases, SARS may issue a VAT number sooner.

However, if your application is selected for additional checks, you may be asked to submit supporting documents or complete identity verification, which can extend the process.

To avoid delays, make sure all your details are accurate and respond promptly to any follow‑up requests from SARS.

What are the requirements to register for VAT?

Before registering for VAT, you’ll need to have certain information and documents ready.

These usually include:

• Your business registration details
• Proof of business address
• Bank account details in the business name
• Identification for business owners, members, or directors
• Information about your taxable supplies and expected turnover

Having everything prepared upfront can help your application move through the process more smoothly.

Can SARS automatically register me for VAT?

Yes.

If your business exceeds the compulsory VAT registration threshold and you don’t register on time, SARS can register you for VAT automatically.

This can result in backdated VAT liabilities, penalties, and interest, which can be costly for your business.

To stay in control and avoid unexpected charges, it’s best to monitor your turnover carefully and register as soon as you’re required to.

Is the first R85,000 VAT‑free in South Africa?

No. This is a common misconception.

VAT in South Africa is not calculated like income tax, and there is no VAT‑free portion of turnover.

Once you’re registered for VAT, you must charge VAT on all taxable supplies from your effective registration date, regardless of the amount.

Can I register my company for VAT if I haven’t started trading yet?

In most cases, SARS requires proof that your business is already making, or is about to make, taxable supplies.

If you haven’t started trading yet, you may still qualify for VAT registration if you can show clear evidence that trading will begin soon, such as signed contracts or invoices issued.

Each application is assessed on its own merits, so providing clear supporting information is key.

How do I get my VAT number after registering?

Once your VAT registration is approved, SARS will issue your VAT number and make it available through your eFiling profile.

You’ll also receive a VAT registration confirmation, which you can use when issuing tax invoices and updating your business records.

Make sure you start including your VAT number on invoices and official documents as soon as your registration is confirmed.

What does it cost to register for VAT?

SARS does not charge a fee to register for VAT.

However, if you use an accountant or a third‑party service to help with your registration, they may charge a professional fee for their assistance.

What is a VAT registration certificate, and how do I get one?

A VAT registration certificate is official confirmation that your business is registered as a VAT vendor.

You can usually access this document through SARS eFiling once your registration is approved.

Some suppliers or customers may ask for this as proof that you’re VAT‑registered, so it’s a good idea to keep a copy on hand.

Editor’s note: This article was originally published in November 2023 and has been updated for relevance.