Sars aware of almost 50 000 businesses escaping mandatory VAT registration rules
· Citizen
Tens of thousands of businesses are in the regulatory crosshairs of the South African Revenue Service (Sars) due to their value-added tax (VAT) registration status.
The businesses have not been complying with Sars’ mandatory VAT registration regulations regarding annual revenue over a certain threshold.
Visit sport-newz.biz for more information.
The information was revealed in a written response to a recent parliamentary question directed to the Ministry of Finance.
While the finance ministry highlighted the compliance data, the initial question specifically queries the number of foreign-owned businesses that were complying with tax regulations.
The ministry highlighted that neither Sars or National Treasury kept nationality-specific taxation stats, with activists stressing the focus on nationality was stoking xenophobic flames.
Mandatory VAT registration
The ministry’s response stated that Sars was aware of at least 48 773 taxpayers operating small businesses and spaza shops that met the revenue threshold, but were not VAT registered.
It added that 11 988 were identified and forcibly registered during the 2025/26 financial year, collecting an additional R500 million in the process.
Gauteng and the Eastern Cape had the highest number of businesses forced to comply in recent months with 8 802 and 1 712, respectively – 87% of forced new registrations.
The ministry explained that it used information from other government departments, third-party data from banks and service providers and point-of-sale data to track non-compliance.
Sars also tracked compliance via audits, reviews and field visits to high-risk sectors and suburbs.
The new financial year will see new thresholds, with Sars adjusting the mandatory VAT registration threshold for R1 million to R2.3 million as of 1 April.
Additionally, the voluntary VAT registration threshold was increased from R50 000 to R120 00 from the same date.
“These measures are aimed at broadening the tax base, improving voluntary compliance, and ensuring that all qualifying businesses regardless of ownership or nationality comply with the tax laws of the Republic,” the response stated.
‘Blame on migrants’
The question was posed by uMkhonto weSizwe (MK) party’s Carol Mafagane, who asked if the ministry could verify the number of foreign-owned businesses that were VAT registered.
The MK party parliamentarian also wanted to know how many spaza shops were foreign-owned, how many compliance inspections were conducted and what was being done to ensure foreign nationals were complying with tax.
“Sars does not apply different tax registration or compliance requirements based on nationality and Sars does not maintain VAT registration data disaggregated by the nationality of business owners.
“Sars is unable to provide the total number of foreign‑owned informal businesses or spaza shops registered for VAT or a breakdown by province or municipality on this basis,” the finance ministry confirmed.
Foreign shop owners bore the brunt of last week’s protest in East London where shops, equipment and vehicles were torched, while large groups demanded identification from suspected illegal immigrants.
The Workers and Socialist Party (Wasp) denounced the obsession with foreign nationals, calling followers of MK party, Operation Dudula, March and March, and others “far-right populist forces”.
Wasp accused political parties and civil organisations targeting foreign nationals of focusing on the symptom and not the cause of economic struggles.
“Working-class anger against the cost-of-living crisis cannot be turned against even more deprived working people, but should be against the ruling class across Africa.
“Successive governments have implemented austerity and privatisation, deliberately creating scarcity that xenophobes blame on migrants.
“The only effective response is to build a counter-politics based on a working-class socialist programme,” Wasp concluded.
NOW READ: MK party aims to remove self-determination from the constitution, Cape separatists respond