VAT limit increased for businesses in South Africa
Finance Minister Enoch Godongwana has adjusted the compulsory VAT registration threshold for businesses in South Africa from R1 million to R2.3 million.
The VAT registration fee has not been changed since 2009, and businesses were required to register for VAT after reaching R1 million in turnover.
The lack of adjustment was criticised by those who work with SMEs as a potential limit on business growth, as many businesses would have to focus on administrative tasks instead of growth.
In his 2026 Budget Speech, Godongwana said that the idea to change the VAT registration fee came from “Tips for the Budget,” where members of the public send in their opinions and suggestions.
A small business owner from Gauteng called on the Minister to increase the threshold, as it has not kept pace with the cost of doing business over the last 17 years.
Godongwana has now increased the threshold for compulsory VAT registration from R1 million to R2.3 million, which broadly aligns with inflation.
Another measure to support businesses has seen the National Treasury raise the capital gains tax exemption for the sale of a small business for older persons from R1.8 million to R2.7 million.
This applies to small businesses worth R15 million instead of the previous R10 million. “It will enable small business owners to receive more tax relief when they sell their businesses,” said the Minister.
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