Staying VAT-registered on turnover tax
Whether a South African micro business on turnover tax can stay registered for VAT, which VAT period applies, and what changes on its invoices.
By Achekam · · 5 min read · For Running a business businesses in South Africa
One of the attractions of turnover tax is that it takes VAT off a small business's plate. No more VAT returns, no more output and input tax, one simple tax on turnover instead. For many micro businesses that is exactly the point.
But some owners hesitate at the VAT part. Their customers are other businesses, those businesses are VAT vendors, and the first thing they ask for is a tax invoice. Dropping out of VAT could make the business look smaller, or make its prices less attractive to the customers it most wants to keep. This article explains whether a micro business on turnover tax can stay in the VAT system, how the voluntary registration rules fit, which VAT period applies, and what the choice means on your invoices.
The election to remain in the VAT system
SARS says turnover tax replaces income tax, VAT, provisional tax, capital gains tax and dividends tax for micro businesses with qualifying annual turnover of R2.3 million or less. In the same breath, it adds that a registered micro business may elect to remain in the VAT system.
So the answer to the headline question is yes. Turnover tax takes VAT away by default, but a micro business can choose to keep it. The election is a decision about VAT only: the business still pays turnover tax in place of the other taxes on the list.
How turnover tax itself works, including its thresholds and rate table, is covered in turnover tax for micro businesses from April 2026.
Where the VAT thresholds sit
The VAT thresholds are worth understanding before you decide, because they explain why VAT registration is a choice for most micro businesses rather than an obligation.
SARS's VAT page says that, as announced in the 2026 Budget Speech, the compulsory VAT registration threshold increased from R1 million to R2.3 million with effect from 1 April 2026. That is the same figure as the turnover tax ceiling, though the two tests measure different things: one looks at qualifying turnover, the other at taxable supplies. Check both against your own figures rather than assuming they line up.
For a business below the compulsory threshold, VAT registration is voluntary. SARS says a person may register voluntarily for VAT if taxable supplies are below R2.3 million but have, under certain circumstances, exceeded R120 000 in the past 12 months. SARS notes that the Voluntary Registration Regulation has not yet been updated, but that it is administering applications on the increased threshold from 1 April 2026.
These figures are as SARS published them at the time of writing; confirm them with SARS before you act.
Why VAT-registered customers change the sum
SARS explains how VAT works for a vendor: it pays SARS the difference between output tax and input tax, or claims a refund where input tax exceeds output tax.
Look at that from your customer's side. If your customer is a VAT vendor and you charge VAT on a valid tax invoice, that VAT is input tax in your customer's hands, which it can set against its own output tax. If you are not registered, your price carries no VAT, and your customer has nothing to claim.
From your own side, staying registered lets you claim input tax on what you buy, but obliges you to charge output tax on what you sell. Put together:
| Your customers are mostly | Staying VAT-registered tends to |
|---|---|
| VAT vendors | Leave their cost unchanged, since they can claim the VAT you charge |
| Members of the public or non-vendors | Add VAT to what they pay, with nothing for them to claim |
| A mix | Need working through customer by customer |
That is why the right answer depends on who buys from you, not just on how big you are.
Category D for micro businesses
If you stay in VAT, you will still file VAT returns, so the question becomes how often. SARS's page on VAT tax periods says Category D, with six-monthly returns for periods ending in February and August, applies mainly to farmers with taxable supplies below a set level and to micro businesses registered in terms of the Sixth Schedule to the Income Tax Act. SARS's tax periods page lists each category and who it applies to; that page was last updated in January 2025, so confirm your category with SARS.
Six-monthly returns are far lighter than a monthly or two-monthly cycle, and for a micro business that has stayed in VAT for its customers' sake, that lighter rhythm is part of what makes staying in workable. The other categories, and how SARS assigns them, are covered in VAT categories A to E.
Keeping the VAT number on your Achekam documents
Whatever you decide, your invoices need to show it correctly.
In Achekam, a business enters its VAT registration number in Settings under Firm Profile. Documents made by the server print that number, and are titled Tax Invoice only when a VAT number is set. So a micro business that stays registered keeps its number in place and its invoices carry it. One that leaves VAT should remove the number when the deregistration takes effect, so its documents stop being titled as tax invoices.
On each invoice line, a South African business sets the VAT to 15% or 0%. The invoice screen does not tell zero-rated and exempt apart, so if you stay registered and make zero-rated supplies, keep your own note of which 0% lines are zero-rated, because the screen will not show it.
Issuing an invoice in Achekam takes the next number in your sequence and posts it to the ledger as debtors, sales and output VAT, so the VAT you charge reaches your books in the same step rather than being retyped.
Making the decision
List your main customers and mark which are VAT vendors. If most of them are, staying in VAT probably costs them nothing and may matter to them. If most are not, leaving VAT may make you cheaper. Then decide, tell SARS, and make sure your invoices in Achekam match the choice from the first one you send.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
