You are legally obligated to register for VAT when your taxable turnover (gross sales / Income) hits R1,000,000 in any rolling 12 months—not when you make a profit. You can also register voluntarily from R50,000 in taxable sales. If you ignore this, SARS can backdate your registration and bill you for VAT you should’ve charged—plus interest and penalties.  

Date check: thresholds and rules below are current as at 21 October 2025.

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Part 1 — When exactly must I register?

The compulsory trigger

You must register once the value of your taxable supplies (standard-rated + zero-rated sales) exceeds R1,000,000 in any consecutive 12-month period, or if there are reasonable grounds to expect you’ll exceed it. This is a rolling test—check your last 12 months at the end of every month. Apply within 21 business days of becoming liable.  

Taxable supplies vs exempt supplies

• Count toward the threshold: standard-rated and zero-rated sales (yes, zero-rated still count).
• Don’t count: exempt supplies like most financial services, residential rentals, certain education and public passenger transport.
• See SARS’s VAT 404 Guide for definitions and examples.  

Voluntary registration (useful for B2B creatives)

You may register voluntarily if your taxable supplies are under R1m but over R50,000 in the past 12 months. (There are limited circumstances to register even if under R50k—see regulations.)  

A note on your registration date

SARS sets an effective date of registration (it can be backdated to when you became liable). If you delayed, expect SARS to treat you as if you were registered from that earlier date.  

What if I ignore the rules?

1. Backdated VAT on past sales
2. If SARS backdates you, you owe VAT on those historical invoices—even if you never charged clients. The VAT is extracted with the tax fraction (15/115) from VAT-inclusive amounts.  
3. Interest and penalties
4. Late or under-declared VAT attracts interest and penalties under the VAT Act/Tax Administration Act. Voluntary disclosure can sometimes reduce penalties, but only if you approach SARS before they audit you.  
5. SARS can register you anyway
6. The Commissioner may compulsorily register a person who should have registered. Recent cases show this is being enforced.  
7. Backdating admin
8. eFiling can only backdate up to 6 months; earlier dates usually require a SARS branch appointment with supporting documents (financials, contracts, invoices).  

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Part 2 — How VAT actually impacts your pricing and cash flow

Client facing industries often quotes inclusive prices to consumers but exclusive prices B2B. Either way, VAT is calculated on the ex VAT amount. When you work out your margins, think in ex VAT.

Quick glossary

• Output VAT: VAT you charge on your sales (usually 15%).
• Input VAT: VAT your suppliers charge you; if you’re a vendor and have valid tax invoices, you can claim it.
• VAT payable/refund: Output − Input (pay SARS if positive; get a refund if negative).  

Four common scenarios (simple numbers)

Assume standard 15% VAT.

A) You sell to a VAT-registered company (e.g., agency → corporate)

• You quote R10,000 ex VAT → invoice R11,500 incl.
• You owe SARS R1,500 output VAT.
• Your client claims the R1,500 as input VAT.
• Commercial takeaway: In B2B, price comparisons tend to be ex VAT. Your competitiveness is your ex VAT number.

B) You sell to a consumer or non-vendor (e.g., photographer → individual)

• Same R10,000 ex VAT → R11,500 incl.
• Customer can’t claim input VAT, so R11,500 is the real price to them.
• Pricing watch-out: Moving from non-VAT to VAT-registered can make your sticker price look 15% higher to non-vendor clients. Consider packaging, tiered options, or anchoring your value to soften the jump.

C) You buy from a VAT-registered supplier (e.g., camera gear)

• Price R20,000 ex VAT → R23,000 incl.
• You claim R3,000 input VAT; your true cost = R20,000 (cash-flow timing aside).

D) You buy from a non-vendor

(e.g., freelancer below R1m)

• They invoice R20,000 (no VAT).
• No input VAT to claim, so your true cost remains R20,000.
• If a VAT-registered supplier offered R20,000 ex VAT instead, your net cost would also be R20,000 after claiming the input VAT—so compare ex VAT numbers, not the inclusive figures.

Pulling it together: a month in the life (example)

• Made Sales of: R100,000 ex VAT → Output VAT R15,000
• Costs from VAT vendors (with valid tax invoices): R60,000 ex VAT → Input VAT R9,000
• VAT to pay SARS: 15,000 − 9,000 = R6,000
• Your margin analysis stays ex VAT: Focus on R100k − R60k = R40k gross margin; the VAT is a pass-through (apart from timing effects).

Zero-rated sales still count toward the R1m threshold and still sit inside the VAT system (you can usually claim related input VAT). Exempt sales don’t.  

Simple compliance checklist

• Track a rolling 12-month total of taxable sales at each month-end.
• When you cross or expect to cross R1,000,000, apply within 21 business days.  
• Keep valid tax invoices to support input VAT claims.
• File your VAT201 and pay (or claim a refund) by the due date for your tax period.  
• If you realise you’re late, consider voluntary disclosure promptly to mitigate penalties.  

Final word

VAT is a pricing and cash-flow framework, not a profit driver.

If most of your clients are VAT-registered, VAT should be largely neutral (you think in ex VAT, they claim input VAT).

If your clients are mostly consumers or non-vendors, you’ll need to plan your price architecture so VAT doesn’t surprise them.

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