VAT deregistration
The compulsory VAT threshold rose from R1 million to R2.3 million on 1 April 2026, which put a lot of small vendors above the line they registered for and below the line that now requires it. Deregistering is not just a form though. Everything the business still owns is treated as sold to you on the way out, and that exit charge catches people who thought cancelling was free. We test whether you qualify, work the exit charge out before you commit, and file it.
When you can, and when you must
\nTwo different routes lead to deregistration and they have different urgency.
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- You may deregister where SARS is satisfied your taxable supplies for the next 12 months will not exceed R2.3 million. Section 24(1) ties this to the registration threshold, so it moved automatically when the threshold moved. \n
- You must notify SARS within 21 days if you stop carrying on all enterprises. Section 24(3) makes that a duty, not an option, and it runs from the date you actually ceased. \n
- A voluntary vendor who never reaches R120 000 of taxable supplies, or who fails the conditions the voluntary registration was granted under, can also be cancelled. \n
- SARS can refuse if there are reasonable grounds to believe you will be trading again within 12 months. A quiet season is not a cessation. \n
The exit charge is the part people miss
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- Everything the business keeps is deemed soldSection 8(2) treats goods and assignable rights forming part of the enterprise as supplied immediately before you stop being a vendor. You pay output tax on them even though no money changed hands. \n
- Valued at the lower of cost or market valueSection 10(5) sets the consideration as the lesser of cost, including VAT charged and delivery, or open market value. On a depreciating asset that usually means market value, which is a mercy. \n
- Fixed property is not carved outA building used in the enterprise is caught like anything else, and on property the number is rarely small. This is the single most common reason a deregistration is worse than staying registered. \n
- Some assets are excludedAnything on which input tax was denied under section 17(2), such as entertainment and most motor cars, and assets that were donated to the business. \n
- It can be paid over six monthsSARS allows the exit liability in six equal monthly instalments, which is worth knowing before you decide you cannot afford to deregister. \n
What actually goes wrong
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- Deregistering without pricing the exit chargePeople cancel to save on compliance and get an assessment they did not budget for. We work it out first so you can decide. \n
- Missing the 21 day notificationIf you closed the business, the clock started on the day you closed it, not on the day you got round to the paperwork. \n
- Stopping charging VAT too earlyYou stay a vendor, and must keep charging and claiming, until the last day of the final tax period SARS names in its cancellation notice. Stopping early creates an under declaration. \n
- Forgetting the input tax you are still owedUnclaimed input tax can go into the final return within five years. After that return is filed there is no further chance. \n
- Assuming eFiling handles itSARS lists only the branch where you are registered, email, and a virtual appointment as channels for the VAT123e. We use a listed channel rather than one that looks convenient. \n
What you get for R890
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- A qualify or not answer firstMeasured against the R2.3 million forward looking test, or the cessation route if you have closed. If deregistering would cost you more than it saves, we tell you before you pay. \n
- The exit charge calculatedEvery asset still in the business listed, valued at the lower of cost or open market value, with the excluded items identified and the output tax totalled. \n
- The VAT123e completedPrior and expected 12 month supplies, the cessation date, purchaser details and the sale agreement if the enterprise was sold, and the value of assets retained. \n
- Lodged through a channel SARS actually listsWith a written record of what went where and when. \n
- Your final return mapped outWhere the exit charge goes, which period it falls in, what input tax to sweep up, and when you must stop charging VAT. \n
- The instalment option explainedIf the exit charge is uncomfortable, what asking for six months involves. \n
How it works
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- 1Order and answer the short formYour VAT number, last 12 months of taxable supplies, what you expect for the next 12, and whether you have ceased trading. \n
- 2We test it and price the exitYou get the qualify answer and the exit charge figure before anything is filed. \n
- 3We prepare and lodge the VAT123eThen map your final return so the last period is filed correctly. \n
Not sure whether coming out of the VAT net is worth it? Ask us first and you get a written answer within one business day.
\nFrequently asked questions
Is it still R1 million?
No. SARS has been administering a compulsory threshold of R2.3 million since 1 April 2026, with voluntary registration from R120 000 instead of R50 000. The amendments had not been promulgated when this was written, but SARS is applying the new figures in the meantime. Note that the VAT 404 Guide for Vendors has not been updated and still shows the old numbers.
What does SARS charge to deregister?
Nothing. There is no SARS fee. The only cost is our R890 and whatever the exit charge on your retained assets comes to.
What is the exit charge?
When you stop being a vendor, section 8(2) treats the goods and assignable rights still in the business as if you had sold them to yourself. You pay output tax on that deemed supply, valued under section 10(5) at the lower of cost or open market value. Assets on which input tax was denied, such as entertainment and most motor cars, and donated assets, are excluded.
Can I deregister on eFiling?
SARS lists three channels for the VAT123e: the branch where you are registered, email, and a virtual eBooking appointment. eFiling and the Online Query System are not listed for this form, so we use a channel SARS actually publishes.
When do I stop charging VAT?
On the last day of the final tax period stated in the cancellation notice SARS sends you, not on the day you submit the form. Keep charging and claiming until then.
How long does it take?
SARS publishes no turnaround for VAT deregistration, so we do not quote one. We prepare and lodge within three working days of getting your figures, and then chase.
Related
We prepare and lodge the cancellation under your written authority. SARS decides whether to cancel and sets the final tax period. Sources: Value-Added Tax Act 89 of 1991 sections 8(2), 10(5), 17(2), 23(1) and 24; the SARS cancellation of VAT registration page and form VAT123e; the SARS Budget 2026 frequently asked questions confirming the R2.3 million and R120 000 thresholds administered from 1 April 2026. Those amendments were not yet promulgated when this page was written. This is information, not tax advice.