With Compliments

With SARS increasing the VAT registration threshold from R1million to R2.3million from 1 April 2026, most vendors are asking themselves whether they can now deregister from VAT.

Although this may be a logical and attractive step, it could be a costly tax event.

Built into the VAT Act are provisions that can be triggered once a VAT vendor decides to exit the VAT system – SARS will deem Output VAT on certain goods or assets still forming part of the taxpayer’s business on deregistration.

Where Input VAT was previously claimed on these assets, a VAT vendor would now need to pay Output VAT (15% standard rate) on the value of these assets (even though no actual ‘sale’ of assets or rights/ goods have occurred and no cash has been received by the enterprise).

Deregistration for VAT may result in an unexpected liability and payment to SARS – approach this with caution.

Please contact us directly should you want to consider this for your business before you make a decision to deregister.

Juanita Roman | Director PG DIP (Tax)

Fatima Bapukee | Chartered Accountant (SA) PG DIP (Tax)

Please contact us should you require any assistance or advice.
We are here to help you.