Tax Number vs VAT Number
What your business gets when it is registered, what each number is used for, and when VAT starts to matter
Tax Number vs VAT Number in South Africa (What You Actually Get)
When you register a new business in South Africa, you do not automatically receive a VAT number. What you do receive is an income tax number from SARS.
This is one of those small details that causes a lot of confusion early on, especially when people start dealing with invoices, suppliers, or other businesses that ask for a VAT number.
Understanding the difference between a tax number and a VAT number, and when each one actually applies, will save you from a lot of back-and-forth later.
What you get when you register a business
When your company is registered with CIPC and linked with SARS, the business is issued an income tax number.
This tax number is used to identify your business for income tax purposes. It is how SARS tracks what your business earns and what tax is owed.
This forms part of the overall setup process outlined in the small business startup checklist, where the key steps are broken down in a practical way.
The important part here is that every registered business has a tax number from the beginning. You do not need to apply for it separately.
What a tax number is actually used for
Your business tax number is used for all income tax related matters with SARS. This includes:
• submitting annual company tax returns
• declaring income and expenses
• paying any tax that is due
• communicating with SARS about your business
Even if your business is small or not actively trading yet, the tax number still exists and remains tied to the company.
As your business starts operating, this becomes part of how you manage your day-to-day setup and admin, which is also covered in the starting a small business online guide.
What a VAT number is and when you need one
A VAT number is something completely separate. It is not issued automatically when your business is registered.
You only receive a VAT number once you register for VAT with SARS.
VAT registration becomes compulsory when your business turnover exceeds R2.3 million within any consecutive 12 month period. At that point, you are required to register and start charging VAT on your products or services.
You can also choose to register voluntarily if your turnover is above R120,000, but this depends on how your business operates and whether it makes sense financially.
Once you are VAT registered:
• you must charge VAT on your invoices
• you must submit VAT returns to SARS
• you can claim input VAT on certain business expenses
This affects how you price your services and how your business presents itself, which is why it often ties back into your small business branding checklist.
Why this causes confusion
The confusion usually comes from the assumption that a VAT number is part of standard business registration.
It is not.
Every business has a tax number from the start, but a VAT number only comes into play once the business reaches a certain size or chooses to register.
On top of that, many suppliers and corporate clients ask for a VAT number by default, even when it is not actually required. This can make new business owners think they are missing something.
In most cases, if you are not VAT registered yet, you simply invoice without VAT and include your company registration details instead.
What this means for your business right now
If your business has just been registered, you already have:
• a company registration number
• a SARS income tax number
You do not have a VAT number unless you have specifically applied for VAT registration.
For most new businesses, there is nothing missing. You are set up correctly.
As your business grows, VAT may become relevant later, but it is not something you need to worry about immediately unless your turnover requires it.
If you are working through your setup step by step, the startup checklist helps keep everything aligned without missing anything important.