Why 'stagnant' VAT threshold is good Sars income stream

The compulsory threshold for value-added tax (VAT) registration has been R1 million for the past 16 years.

- Amanda Visser

If it had kept pace with inflation, the threshold would have been in line with global practices of closer to R2 million.

This means a very small business with a turnover of about R83 000 per month must keep meticulous records and ensure its accounting systems are current to avoid penalties for late payments or accounting errors.

Large businesses exceeding annual turnover of R30 million must file a VAT return monthly.

This threshold would have been closer to R210 million if it had kept pace with inflation.

Charles de Wet, tax executive at ENSafrica, says the threshold for compulsory registration started at R150 000, was increased to R300 000 and increased to R1 million in 2008 (effective in 2009) for the last time.

Cash flow implications

The minimum threshold for voluntary registration of R50 000 should have been more than R100 000 by now.