South Africa’s 2026 Budget brought one of the most meaningful tax shifts in over a decade—particularly for healthcare practitioners, who often navigate the balance between growth and the administrative overload that comes with needing to register as a VAT vendor with SARS. With the compulsory VAT registration threshold set to rise from R1 million to R2.3 million from 1 April 2026, many practitioners may find themselves suddenly exempt from VAT reporting requirements that previously felt unavoidable.
This change is designed to ease the administrative burden on small businesses, improve cash flow and essentially put an effective additional 15% turnover in their pockets! With medical schemes paying a benefit amount that is a set fee for service rendered as per their benefit guides (regardless of the VAT status of the practitioner), the pain felt by those practitioners traditionally exceeding R1 million turnover in a year will now be eased. This adjustment also opens up new growth opportunities, offering the potential to significantly influence your income, expand your practice, and lower your SARS compliance obligation & costs.
1. What Exactly Is Changing?
Higher VAT Registration Threshold
From 1 April 2026, the compulsory VAT registration threshold increases to R2.3 million, up from the long standing R1 million. The voluntary registration threshold also climbs to R120,000. This shift aligns with inflation that was historically not applied to the threshold and responds directly to feedback from small business owners who struggled under compliance requirements that hadn’t been updated since 2009.
Who Benefits the Most?
Small practices—especially solus practice physiotherapists, Biokineticists, Chiropractors Psychologists, Occupational therapists, Dietitians, Speech Therapist & Audiologists and other independent healthcare professionals – who often hover just above or below the R1 million annual turnover mark.
When the original R1 Million threshold was put into place, most practices were earning well below threshold, but as price inflation crept upwards each year, the threshold was never increased, resulting in them being trapped in a reporting and regulatory burden, without being able to really benefit.
These practitioners can now grow their practices through the historic R1 million mark without the pressures and direct revenue loss due to the forced VAT registration, which now only occurs at the R2.3 million mark.
2. What This Means for Businesses Nearing the Threshold
If your practice’s annual turnover sits below the R2.3 million mark, the VAT threshold change can bring several benefits:
Reduced Administrative Burden
VAT returns, record keeping, invoice compliance, and periodic SARS submissions are a major time sink. Removing these obligations allows for more focus on clinical service, patient care, and practice growth. The Budget explicitly notes this expected ease of admin pressure.
Improved Cash Flow
VAT collection often leads to short term cash flow strain, especially for medical practitioners whose clients or medical aids pay on varied timelines, and even more so for practices treating injury on duty patients, where VAT must be settled in the 2 month cycle from invoicing (raising the claim), while payment terms often exceeds 12 months and longer. Keeping turnover VAT free up to R2.3 million improves your liquidity.
An effective additional 15% for your practice for the same work
A practitioner who is VAT registered receives the R1150 payment from either the medical scheme or the patient but is then legally required to remit 15% of this amount to SARS, minus any deductible input VAT. In basic terms, this leaves the practice with only R1000 in actual revenue. Conversely, by remaining unregistered for VAT, the practice retains the entire R1150 as revenue, as no portion is payable to SARS.
It is a misconception to think a VAT-registered practice can simply add 15% on top of the R1150 to cover the tax liability and maintain an effective turnover of R1150. Doing so would result in a total bill of R1322.50, which exceeds the standard scheme rate. This discrepancy typically leads the medical scheme to “cut-and-pay” the patient directly, reject the claim entirely, or—if you are under a formal payment agreement—result in a violation of agreed rates that could lead to your removal from the arrangement.
Opportunity for Growth Instead of Compliance Anxiety
The previous threshold meant some providers intentionally capped growth just to avoid crossing into VAT territory. The new threshold eases this constraint as you have significant room to grow your revenue and even increase the size of your team. What was a monthly turnover threshold equivalent of R83,333 is now increased to R191,667!
A massive change providing much needed headroom for growth before SARS VAT compliance requirements kick in. This is good news for the majority of single owner practices. An example practice may look like this:
3. What If You’re Over the Current Threshold but Below the New One?
Here’s the good news: you may deregister for VAT from 1 April 2026, provided your turnover does not exceed the new threshold. This is explicitly permitted under section 24(1) of the VAT Act. For many practitioners, deregistration will bring significant relief, but it should be approached methodically.
4. Steps to Deregister from VAT (if you’d like to cut the red tape)
If your practice’s taxable turnover is below R2.3 million, and you wish to stop VAT reporting once the new rules take effect, follow these steps:
- Step 1: Confirm Your 12 Month Turnover: SARS assesses VAT registration eligibility based on the preceding 12 month total value of taxable supplies.
- Step 2: Apply for Deregistration With SARS: Use SARS eFiling to submit a VAT deregistration request under section 24(1).
- Step 3: Prepare Final VAT Returns: File a final VAT201 return, Settle any outstanding VAT liability, and Declare any assets on which VAT may be payable upon deregistration.
- Step 4: Update Pricing, Invoices, and Systems: Stop charging VAT, Remove VAT numbers from invoices and documents, and Adjust Practice Management and Accounting systems accordingly.
- Step 5: Communicate With Patients and Medical Aids: Provide updated invoices reflecting your VAT free status to avoid reimbursement confusion.
5. Should Every Practitioner Deregister? Not Necessarily
Despite the admin relief, remaining VAT registered can sometimes be beneficial, especially if your practice incurs significant VAT deductible expenses (e.g., equipment purchases, medical software, rental, consumables). Asking your accountant for a review and comparison is a worthwhile exercise, before blindly committing to deregistering for VAT.
6. Final Thoughts from EZMed’s Team
This VAT threshold increase represents tangible relief for South Africa’s independent healthcare sector, and we welcome the increase! By easing compliance pressure and enabling more organic growth, practices turning over less than R2,3 million per annum can focus less on SARS paperwork and more on patient outcomes.
EZMed advocates for the Minister to ensure that the VAT thresholds continue to be adjusted annually or bi-annually in line with inflation, to continue to support healthcare practitioners. We further implore the Ministers of Health and Finance to consider exempting medical services from VAT all together.
If your practice turnover falls below the new R2.3 million threshold, you now have a real strategic choice—whether to simplify and deregister, or to stay VAT‑registered for specific financial advantages. Either way, this Budget shift brings long‑overdue breathing room for healthcare professionals across the country.
EZMed is here to support you in your business. Our platform is already set up to manage VAT changes, so your VAT settings are easily adjustable, and our team is ready to assist, should you need help. Should you need any financial assistance or advice in making these changes to your practice or to deregister for VAT, feel free to contact our Financial partners at CMV Accountants, who have years of experience in the management of medical practice tax planning, financial advice and day to day financial and payroll management.