ERP and accounting software for South Africa: VAT, SARS

South African compliance in one view

A South African business that sells goods or services deals with one tax authority for almost everything: SARS administers VAT, income tax, PAYE, UIF contributions collected with PAYE, the Skills Development Levy and customs. VAT runs at 15%, companies pay income tax at 27%, and employers declare payroll taxes every month. There is no e-invoicing mandate yet, which means a well-kept ledger and clear tax invoices are still the core requirement.

The 2026 changes matter for small firms. The compulsory VAT registration threshold rose to R2.3 million from 1 April 2026 and the voluntary threshold to R120,000. SARS says it is processing registrations on the new thresholds while the regulation is formally updated, so check the current position before deregistering or delaying a registration.

• VAT: 15% standard rate, zero-rating for exports and certain basic foodstuffs, exemptions for some financial services and residential rent.
• Registration: compulsory above R2.3 million of taxable supplies in twelve months, voluntary above R120,000, from 1 April 2026.
• Payroll: PAYE, UIF and SDL declared monthly on the EMP201.
• Records: five years from submission under the Tax Administration Act.
• E-invoicing: proposed in SARS's August 2026 consultation paper, no mandatory date.

VAT rates, registration and the 2026 thresholds

The standard VAT rate is 15%. A proposal in the March 2025 budget to raise it to 15.5% was withdrawn, and the rate was kept at 15% from 1 May 2025. Zero-rated supplies include exports of goods and a list of basic foodstuffs such as brown bread, maize meal, rice, fresh fruit and vegetables, eggs and milk. Exempt supplies, on which no VAT is charged and no input VAT is claimed, include certain financial services and residential accommodation.

From 1 April 2026 a business must register when taxable supplies exceed R2.3 million in any consecutive twelve-month period, or are expected to. Below that, a business may register voluntarily once supplies have exceeded R120,000 in the past twelve months, which many business-to-business suppliers do because their customers want to claim input VAT. SARS has said the regulations were not yet updated when it began administering the higher thresholds, and that registrations are being processed on the new figures.

Filing VAT: the VAT201 and tax periods

Registered vendors file the VAT201 return through eFiling for each tax period and pay by the due date, which for electronic submission is generally the last business day of the month after the period ends. Most small and medium vendors file every two months; larger vendors with taxable supplies above R30 million file monthly, and some small vendors and farmers have longer periods. SARS assigns the category when you register.

The return needs output VAT from sales, input VAT from purchases and expenses, and adjustments such as bad debts and credit notes. A finance system has to produce those totals for exactly the tax period, by branch where you file for one legal entity with several branches, and let you trace each total back to the invoices behind it.

Tax invoices: what they must show

A VAT vendor must issue a tax invoice within 21 days of a supply. A full tax invoice is required when the consideration exceeds R5,000, and an abridged tax invoice can be used for amounts of R5,000 or less, except for zero-rated supplies, which always need a full tax invoice; no tax invoice is needed at R50 or less. Credit and debit notes follow the same logic when a price is corrected or goods are returned.

Tax invoices are still allowed on paper or as PDF files today, because there is no e-invoicing mandate. Keeping invoice data structured, with the VAT rate and amount per line and the customer's VAT number, is the step that will make any future e-invoicing requirement easier to meet.

• The words tax invoice and an invoice number.
• Your name, address and VAT registration number.
• For a full tax invoice: the customer's name, address and VAT number where registered.
• Date of issue, description and quantity of goods or services.
• Value of the supply, VAT charged and the total, or a statement that VAT is included.

E-invoicing: what SARS has proposed

In August 2026 SARS published a Consultation Paper on VAT Modernisation covering e-invoicing, an interoperability framework and e-reporting, building on its 2023 discussion paper. The paper describes a model in which invoice data is exchanged through accredited access points and shared with SARS, and an implementation that starts with a pilot and moves to voluntary and then mandatory adoption in phases. It carries a disclaimer that its proposals are for consultation.

As of November 2026 no mandatory date has been legislated, and published commentary on the likely timetable differs. We are not going to invent a deadline. The practical step for now is to keep invoices as structured data, with VAT per line and registration numbers captured, and to choose software that can follow when SARS confirms the format and the network.

Company accounts, income tax and payroll

Companies are incorporated under the Companies Act 71 of 2008 and prepare annual financial statements under IFRS or IFRS for SMEs depending on their type and public interest score. Whether a private company needs an audit or an independent review also depends on that score and on how the statements were compiled, so agree it with your accountant each year. The corporate income tax rate is 27%.

Employers register for PAYE and withhold employees' tax, deduct UIF from employees and add the employer's share, and pay the Skills Development Levy of 1% of payroll once annual payroll exceeds R500,000. All three are declared and paid monthly on the EMP201, and reconciled on the EMP501 together with the employee tax certificates issued to staff.

Cities and regions: where the rules differ

VAT, income tax and payroll taxes are national, so a sale in Johannesburg is taxed the same way as one in Cape Town, Durban, Pretoria, Gqeberha, Bloemfontein, East London or Polokwane. What differs by place is mostly local: municipal property rates and service charges, local business licences for some trades, and municipal bylaws for trading hours and signage.

Special Economic Zones are the main exception. A qualifying company carrying on business in an approved SEZ, with at least 90% of its income from business within the zone, may apply a reduced corporate income tax rate of 15% instead of 27%. Because the 90% test is measured on income, a business with an operation inside an SEZ such as Coega near Gqeberha or Dube TradePort near Durban should track that operation as a separate branch or entity in its books.

What a finance system must do for a South African business

Put the rules together and the requirements are concrete. VAT has to be set per invoice line so that 15%, 0% and exempt items can share one invoice. The VAT201 totals must come out of the ledger for the exact tax period, by branch where needed. Credit notes must reverse VAT as well as revenue. Posted entries must be corrected by reversal with an audit trail, because five-year retention only helps if records cannot be quietly changed.

For a business with stock, the system must also keep stock per location and value it consistently, because cost of sales drives taxable income. And because the e-invoicing model is not final, invoice data should be stored in a structured way that can be exported or connected later.

How Skyline Nexus ERP handles South African requirements

Skyline Nexus ERP lets you set up 15%, 0% and exempt tax rates and apply them per invoice line, with tax groups where you need them. Sales, purchases, payments and expenses post to the general ledger automatically, credit notes reverse revenue and VAT, and the VAT report and prefilled VAT return form give you output and input totals for any date range and branch to enter on the VAT201 in eFiling. Skyline Nexus ERP does not file with SARS directly.

Inventory is held per location with FIFO costing, there is a point of sale with cash registers, and bank statements are imported as CSV or Excel files and reconciled on screen, since bank feeds are not offered. The audit trail records every change with old and new values. Payroll for South Africa is not live yet: HR records exist and local payroll is being rolled out country by country, so PAYE, UIF and SDL stay with your payroll provider for now. Prices for South Africa are shown in US dollars, from USD 19 a month for Solo, and every plan starts with a free first month.

Rates, regimes and deadlines in this summary change, and many countries are actively legislating on e-invoicing. This is general information, not tax or legal advice — confirm the current position with the authority named above or with your tax adviser before you rely on it.