SARS Calls on Schools to Cancel VAT Registration

SARS said schools must ensure they have not charged VAT or deducted input tax on supplies made from 1 January 2026.

The South African Revenue Service (SARS) has urged schools registered under the South African Schools Act that are also registered as VAT vendors to apply for the cancellation of their VAT registration, following changes to the tax treatment of schools that came into effect on 1 January 2026.

Under the new rules, supplies made by schools are exempt from Value Added Tax (VAT) from that date, except where a school carries out qualifying welfare activities. The change means affected schools can no longer charge VAT on their supplies or claim input tax deductions linked to those supplies, requiring institutions that previously operated as VAT vendors to adjust their tax affairs.

Schools May Need to Correct VAT Returns

SARS said schools must ensure they have not charged VAT or deducted input tax on supplies made from 1 January 2026. Institutions that have already submitted VAT returns covering periods after the change took effect may need to correct those returns where VAT was treated under the previous rules.

The revenue service has provided a specific process for schools leaving the VAT system, requiring affected institutions to complete the VAT123e – Application for the Cancellation of Registration form. Schools should state the reason for cancellation as "All enterprise activities have ceased on 31 December 2025", reflecting the date immediately before the new VAT treatment took effect.

SARS Provides Two Deregistration Options

Completed VAT123e forms can be emailed to contactus@sars.gov.za, using "VAT deregistration – Schools" as the subject line, giving schools a direct route to submit their cancellation applications without visiting a SARS branch.

Schools can also arrange a virtual appointment through the SARS eBooking system. When making the booking, applicants should choose "Other" as the reason category and select "VAT and PAYE registration/deregistration" as the reason for the appointment.

Exit VAT Must Be Settled

Some schools may have exit VAT obligations when cancelling their registrations, which could arise from assets or other items held when the institution leaves the VAT system. SARS said schools facing an exit VAT liability may submit a request for payment arrangements together with their VAT123e application.

VAT registration will be cancelled once the applicable exit VAT has been declared and paid, or once the school has complied with a payment arrangement agreed with SARS. This makes it important for schools to review their VAT position carefully before completing the deregistration process, particularly where they have previously claimed input tax on assets.

Different Rules Apply to Welfare Activities

Schools conducting qualifying welfare activities may have grounds to remain registered as VAT vendors for those activities, although continued registration is not automatic. SARS said institutions choosing this route must obtain written confirmation from the Commissioner through a ruling.

The tax authority has published additional information to help schools understand the changes and complete the process correctly, including the VAT Reference Guide – Schools Exiting the VAT System and Schools Exiting the VAT System: Frequently Asked Questions, both available through the SARS website.

The changes give schools a clear reason to review VAT returns submitted since the beginning of 2026, identify any necessary corrections and determine whether they should leave the VAT system entirely or seek approval to remain registered for qualifying welfare activities.