VAT Deregistration in South Africa: When and How to Cancel Your VAT Number

When you can deregister

You can apply to cancel your VAT registration once your taxable supplies have dropped below R2.3 million, and you can reasonably show they'll stay there over the next 12 months. SARS can also cancel a registration on its own initiative if a business has stopped trading with no plans to restart within 12 months, or if it never actually got off the ground.

Dropping below the threshold doesn't cancel anything by itself. Until SARS approves your application, you're still a VAT vendor with every obligation that comes with it, filing returns, charging VAT, and keeping records included.

Why some businesses stay registered anyway

Being under the threshold doesn't automatically mean deregistering is the right call. If most of your clients are VAT-registered themselves, they can claim back the VAT you charge, so staying registered doesn't cost them anything, and it lets you keep claiming input VAT on your own expenses. Our VAT registration guide covers that trade-off from the other direction.

Deregistering tends to make more sense when most of your clients aren't VAT-registered, so the VAT you charge is a straight cost to them rather than a wash, and your own input VAT claims are small.

How to apply: step by step

Confirm you meet the criteria: turnover below R2.3 million and likely to stay there, or the business has genuinely stopped trading
Complete a VAT123e form, available on the SARS website, stating clearly why you're applying to deregister
Settle every outstanding VAT return and liability first. SARS won't process a cancellation while anything is still outstanding
Submit the application to the SARS branch where you're registered, along with the completed form
File a final VAT201 return for the final tax period SARS gives you, after it confirms the cancellation date (our VAT201 guide covers the filing itself)

Your final VAT return

Your last VAT201 has an extra requirement most vendors don't expect. SARS requires output tax to be declared on certain assets you still hold when you stop being a vendor, such as stock and equipment you claimed input VAT on, in the return for that final tax period. It effectively reverses input VAT you claimed on things you haven't sold or used up. Ask a tax practitioner to work out the figure for your assets before you file.

How long it takes

SARS can't finalise a cancellation until every outstanding return and liability has been settled, so a missing return or an unpaid amount holds the whole thing up. Confirm your account is fully up to date before you apply, not after.

What changes once you're deregistered

Stop charging VAT on everything you sell, from the effective cancellation date
Remove your VAT number and the "Tax Invoice" heading from your invoice template, and call the document "Invoice" (our invoice guide covers what a non-VAT invoice needs)
Stop claiming input VAT on business expenses
Keep your VAT records for the full 5-year period regardless, SARS can still ask for them

Invo tip: Turn off VAT registration under Settings → Address & registration the same day your cancellation is confirmed, and every invoice after that goes out correctly, without the VAT fields or the "Tax Invoice" heading. See how invoice settings work on the features page.

Thinking about registering again later?

Nothing stops you registering again if your turnover picks back up. You'll go through the same process as a first-time registration, covered in full in our VAT registration guide.