South Africa's Finance Minister announced on February 25, 2026, that VAT registration thresholds will increase effective April 1, 2026, marking the first adjustment since 2009.

VAT Registration Changes

The compulsory VAT registration threshold will increase from R1 million to R2.3 million, while the voluntary registration threshold will rise from R50,000 to R120,000. These changes represent a significant adjustment to registration requirements that have remained static for 17 years.

Carbon Tax Increases

The carbon tax rate increased 30.51% from R236 to R308 per tonne of CO₂ equivalent, effective January 1, 2026. Carbon fuel levies will rise to 19 cents per litre for petrol and 23 cents per litre for diesel from April 1, 2026.

The carbon tax cost recovery quantum for the liquid fuels sector increased from 0.99 cents per litre to 1.29 cents per litre, effective January 1, 2026. Additionally, the government proposed changing the carbon tax threshold for commercial and institutional activities from a capacity-based threshold to a 25,000 tonnes of CO₂ emissions threshold.

Context

The VAT threshold adjustments reflect inflation pressures and aim to reduce compliance burdens on smaller businesses, while the carbon tax increases demonstrate South Africa's commitment to environmental taxation as part of its climate policy framework.