The revised VAT compulsory registration means that if your company turnover is less than R2,3m you could consider deregistering it for VAT.

What are the pros and cons?

In favour of deregistration

1. You only need to get the bookkeeping done annually. That saves a lot of fees.
2. You don’t have to pay someone to submit the VAT returns.
3. If most of your customers aren’t VAT registered, they will be no worse off if you charge them the same as when you were VAT registered. If you don’t have much Input VAT claim, this will increase your profits by about 15%.

Against deregistration

1. Some customers may not buy from you if you are not registered for VAT.
2. When you deregister, you have to pay back to SARS the VAT that you claimed on any assets that you still have.
3. If your company later passes the R2,3m mark, then it will have to re-register.

An alternative

1. You might consider splitting your business between two companies, one registered for VAT (for VAT registered customers) and the other not (for non-VAT registered customers).
2. But be careful. This could cause your company to lose its Small Business Corporation status if your are a shareholder of both.
3. Of course, you could end up with two Small Business Corporations if you get the shareholding right.