Do you have to register?
You must register once your taxable turnover passes R2.3 million in any 12 consecutive months, or when a written contract will take the next 12 months over that. It's turnover, not profit, and the payments insurers make for your repairs count towards it. You may register voluntarily once turnover passes R120 000.
Compulsory registration
R2.3 million
Taxable turnover in any 12 months, applied by SARS since 1 April 2026. It was R1 million.
Voluntary registration
R120 000
In the past 12 months, applied since 1 April 2026. It was R50 000.
VAT rate
15%
The increases announced in March 2025 never took effect.
Turnover tax instead
Below R2.3 million, a micro business can choose turnover tax, a simplified tax on turnover that replaces income tax and, unless you choose to stay in, VAT. You register before the tax year starts or within two months of starting the business. Since 2012 a turnover tax business may also register for VAT.
How to register, and registering late
Apply within 21 business days of becoming liable. You become liable at the end of the month in which your rolling 12-month turnover passes the threshold. Apply on eFiling, or book a virtual appointment with SARS. If SARS flags no risk it issues the number straight away; otherwise it asks for documents and gives you 21 business days to send them.
- Proof of turnover: invoices you've issued, signed financial statements or contracts. SARS doesn't accept business plans.
- Your ID and a recent proof of address.
- A bank confirmation letter for the business account.
- Company registration documents, if you trade as a company.
If you register late
You became a vendor from the date you became liable, whether you registered or not. SARS treats the prices you charged since then as already including VAT, so 15/115 of those takings is owed to SARS out of your own margin, plus a 10% penalty and interest on anything paid late. SARS points late registrants to its Voluntary Disclosure Programme, which can reduce penalties if you come forward before an audit.
Returns and payments
SARS puts most small vendors on two-monthly tax periods: category A (periods ending January, March, May, July, September and November) or category B (ending February, April, June, August, October and December). Monthly returns apply above R30 million turnover, or after repeated late returns.
- File the VAT201 and pay by the 25th of the month after the period, or by the last business day of that month if you file and pay on eFiling.
- File even when there's nothing to declare: nil returns are still required.
- Most shops are on the invoice basis: you owe VAT when you invoice or are paid, whichever comes first, and claim input VAT once you hold the supplier's tax invoice.
- The payments basis, paying VAT only when the customer pays, is only for sole proprietors and partnerships of individuals with turnover up to R2.5 million. Companies and close corporations can't use it.
What your invoices must show
Only a registered vendor may charge VAT or call a document a tax invoice. Issue it within 21 days of the work, one per supply, and keep it for five years.
| Invoice value | What it must show |
|---|---|
| Over R5 000: a full tax invoice | The words “tax invoice”; your name, address and VAT number; the customer's name and address, and their VAT number if they're registered; a serial number and date; a full description, marking any used parts as second-hand; the quantity; and the value, VAT and total. |
| R5 000 or less: an abridged tax invoice | The same, except that the customer's details and the quantity may be left out. |
| R50 or less | No tax invoice is needed, but keep a slip that shows the VAT. |
To change an amount after the invoice has gone out, for a cancelled job or a returned part, issue a credit note or debit note that refers to the original invoice. Don't issue a second tax invoice for the same supply.
Quotes count too: prices you quote to customers must include VAT, or show the price before VAT, the VAT and the total with equal prominence.
Free toolPanel beater invoice templateA tax invoice with everything SARS asks for, or a plain invoice with no VAT if you're not registered, plus the insurer and excess invoices for insurance jobs.Insurance jobs and the excess
On an insurance repair two people pay you: the insurer pays the job less the excess, and the policyholder pays the excess. SARS's Binding General Ruling on short-term insurance says the repairer must issue two tax invoices: one to the insurer for its share and one to the policyholder for the excess. Each carries its own VAT, and the excess includes VAT.
| Invoice | Before VAT | VAT | Total |
|---|---|---|---|
| To the insurer: the job less the excess | R35 652.17 | R5 347.83 | R41 000.00 |
| To the policyholder: the excess | R4 347.83 | R652.17 | R5 000.00 |
| The whole job | R40 000.00 | R6 000.00 | R46 000.00 |
The VAT in the excess is 15/115 of it. The insurer's VAT is the job's VAT less the excess's, so the two invoices always add up to the job.
- The insurer's invoice is a full tax invoice addressed to the insurer, with its VAT number. The insurer claims that VAT back.
- A VAT-registered policyholder, such as a business with a fleet car, can claim the VAT in the excess.
- If the insurer pays the whole job and recovers the excess from the policyholder itself, follow the insurer's instructions on how to address your invoices.
- If the insurer paid the customer cash instead of authorising the repair, the customer is paying you for a private job: one tax invoice to the customer for the whole job.
Collecting that excess is its own job. Our guide to getting paid on repairs covers when to take it and what to do if it isn't paid.
VAT you can claim back
As a vendor you claim back the VAT you pay on what the business buys, as long as you hold a valid tax invoice when you file.
| You can claim VAT on | You can't claim VAT on |
|---|---|
| Parts, paint and consumables from VAT vendors | Wages |
| Equipment, tools and your spray booth | Entertainment, including refreshments for staff |
| Rent, if your landlord charges VAT | Club subscriptions |
| Electricity, water and professional fees | Motor cars: sedans, SUVs, double cabs and minibuses |
| Single-cab bakkies and trucks | Anything without a valid tax invoice |
Used parts from private sellers
When you buy used parts from someone who isn't a VAT vendor, such as a private seller or an unregistered scrapyard, you may claim notional input tax: 15/115 of the price or the market value, whichever is lower, and only as far as you've paid. Keep the seller's signed declaration, a copy of their ID and proof of payment.
Mistakes that cost panel shops
| Mistake | What it costs |
|---|---|
| Charging VAT, or issuing tax invoices, before you're registered | An offence if done wilfully: a fine or up to two years in prison |
| Not registering when turnover passed the threshold | VAT on past takings out of your own margin, a 10% penalty and interest |
| One invoice for an insurance job, or no VAT on the excess | VAT declared wrongly on both halves of the job |
| A second tax invoice instead of a credit or debit note | Two tax invoices for one supply, an offence if done wilfully |
| VAT-exclusive quotes to private customers | A breach of the VAT Act |
| Claiming VAT on a motor car, on entertainment, or without a valid tax invoice | The claim is disallowed, with penalties on what was understated |
| Paying late | A 10% penalty plus interest, 10.5% a year from 1 September 2026, charged for each month or part of a month |
| Not keeping records for five years | An offence under the Tax Administration Act |
Starting out? VAT is one of the registrations in our guide to starting a panel beating business.
