VAT (short for Value-Added Tax) is one of the most important yet often misunderstood components of doing business in South Africa. While it may seem like just another administrative task, managing VAT correctly can have a significant impact on your business’s financial health and compliance status.

Whether you’re newly established or scaling up, understanding how VAT works, when and how to register, and how it affects your operations is essential. At aXia Consulting, we help small business owners navigate VAT with clarity and confidence. 

What Is VAT?

VAT is a tax charged on the supply of most goods and services in South Africa, currently set at 15%. The rate will increase to 15.5% from 1 May 2025 and to 16% from 1 April 2026 as per the 2025 budget speech. It’s a consumption tax, which means it is ultimately paid by the end consumer, but it’s collected and remitted by businesses registered as VAT vendors.

If you are VAT-registered, you:

  • Charge VAT (called output VAT) on taxable supplies made to your customers. 
  • Pay VAT (called input VAT) on qualifying business-related purchases. 
  • Submit the difference to SARS – either as a payment or a refund claim.

Who needs to register for VAT?

VAT registration can either be compulsory or voluntary, depending on your business’s turnover.

Compulsory VAT registration:
 You must register for VAT if your taxable turnover (sales excluding VAT) exceeds R1 million in any consecutive 12-month period. 

Voluntary VAT registration:
If your turnover has exceeded R50,000 over the past 12 months, you may apply for voluntary registration. Many small businesses do this to:

  • Claim input VAT on business expenses.
  • Improve their credibility when dealing with corporate clients who prefer to work with VAT-registered suppliers.Be cautious, though. Voluntary registration brings full compliance obligations, even if your turnover is low.

How to register for VAT

VAT registration is done through SARS and involves several steps:

1.You will need an eFiling profile to be able to register for VAT:
All VAT registration is done through the SARS eFiling platform. You will need a tax reference number and verified login credentials.

2.Gather the required documents:
Depending on your business type, you will generally need:

  • Company registration documents (for companies)

  • Identity documents (for sole proprietors or company taxpayer representatives)

  • Proof of business address

  • Bank account confirmation

  • Latest financial statements or invoices showing turnover as well as proof that these invoices were paid

3.Complete the VAT101 form:
This is available on eFiling. You’ll need to provide business details, contact information, bank details, and the effective date of registration.

4.Submit and verify details:
SARS may request a verification appointment or supporting documents to confirm your eligibility. This can take a few days to several weeks, depending on the backlog and the completeness of your application.


5.Receive your VAT number and registration confirmation:

Once approved, SARS will issue a VAT registration certificate with your VAT number, which you must display on your invoices and tax invoices.

VAT filing and payment obligations

Once registered, you are required to submit VAT returns—called VAT201s—on a regular basis. Most small businesses fall into one of the following categories:

  • Category A: File every two months (odd months: Jan, Mar, May, etc.)
  • Category B: File every two months (even months: Feb, Apr, Jun, etc.)
  • Category C: Monthly (if your turnover exceeds R30 million)

Your return must be filed, and payment must be made by the 25th of the month after the end of the VAT period (if manual) or the last business day of the month (if using eFiling).

Failure to submit or pay on time can result in:

  • Penalties
  • Interest charges
  • Suspension of refunds or compliance clearance

Claiming input VAT

One of the main advantages of being VAT-registered is the ability to claim back input VAT on qualifying business expenses. However, SARS has strict requirements:

  • You must have a valid tax invoice showing the supplier’s VAT number.
  • The goods or services must be acquired for the purpose of making taxable supplies.
  • You must retain supporting documents for at least five years.

Note: Some items—such as entertainment and expenses not directly related to taxable activities—are not claimable, even if VAT was charged.

VAT and cash flow management

VAT can have a significant effect on your cash flow. Here’s how to stay ahead of it:

  • Open a dedicated VAT savings account.
    Transfer the VAT you collect immediately to avoid spending money that doesn’t belong to your business.
  • Keep meticulous records.
    Use accounting software to track VAT on sales and expenses in real time.
  • Plan for payments.
    Large payments can sneak up on you if you’re not monitoring your obligations.
  • Submit returns early.
    This gives you time to correct errors or gather any additional documentation if SARS requests it.

Common VAT mistakes to avoid

  1. Issuing incomplete tax invoices : SARS requires you to add specific details on all the invoices you issue, including your VAT number, the customer’s details, item descriptions, and amounts.
  2. Mixing personal and business expenses : Only expenses used in the course of generating taxable supplies qualify for input VAT.
  3. Late submissions : Even a single missed deadline can result in penalties payable to SARS.
  4. Forgetting to deregister : If your business closes or your turnover consistently falls below the voluntary threshold, you may need to deregister. Failing to deregister can lead to compliance issues.


VAT doesn’t have to be overwhelming, but it does require discipline, accurate record-keeping, and a clear understanding of the rules. Getting it wrong can cost you money or damage your credibility with clients and SARS alike.

At aXia Consulting, we help small businesses register for VAT, submit returns, and stay compliant while offering strategic advice to manage VAT more efficiently as part of your broader financial picture.

If you’re unsure whether to register, need help filing, or want to make sure your VAT affairs are in order, contact us today. We’re here to make the complex simple and to give you the peace of mind to focus on what you do best.

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Nadia Gabriel

Uncategorized

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