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.

Are a tax number and VAT number the same thing?

No. A tax number and a VAT number are two different things.

Your tax number is used for income tax matters with SARS. A VAT number only applies if your business is registered for VAT.

This means you can have a registered business, a company registration number and a SARS income tax number without having a VAT number. For many new businesses, this is completely normal.

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 your company has an income tax number from the beginning. You do not need to apply for a VAT number just because you have registered the company.

What a tax number is actually used for

Your business tax number is used for income tax related matters with SARS. This includes:

• submitting 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.

From 1 April 2026, VAT registration becomes compulsory when your taxable 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 taxable products or services.

You can also apply to register voluntarily if your taxable turnover is above R120,000, although SARS has additional requirements that need to be met for voluntary registration.

Once you are VAT registered:

• you must charge VAT on your taxable invoices
• you must submit VAT returns to SARS
• you may be able to claim input VAT on qualifying business expenses

VAT adds another layer to how you invoice and manage the financial side of your business, so it is worth understanding whether you actually need to register before adding it to your setup.

Why this causes confusion

The confusion usually comes from the assumption that a VAT number is part of standard business registration.

It is not.

Your company has an income tax number from the start, but a VAT number only comes into play once the business reaches the compulsory threshold or chooses to register voluntarily.

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.

If you are not VAT registered, you simply invoice without VAT. You should not add VAT to an invoice unless the business is actually registered for VAT.

If you are working through your setup step by step, the startup checklist helps you work through the other pieces that need attention.