VAT registration is the formal process by which a business notifies tax authorities that it is responsible for charging and collecting Value Added Tax on its sales. Eligibility for VAT registration is primarily determined by whether your taxable turnover exceeds a country-specific threshold such as £90,000 in the UK, 1 million ZAR in South Africa, or $30,000 CAD in Canada within a rolling 12-month period. Some countries require immediate registration for nonresident businesses or those making taxable sales, regardless of turnover.
Once registered, you must:
Add VAT to the prices of most goods and services you sell
Issue VAT invoices to customers
File regular VAT returns with the tax authority
Maintain detailed records of sales, purchases, and VAT collected
Keep supporting documents such as business registration, tax IDs, contracts, and proof of business activities
Registration may also be voluntary for businesses below the threshold, especially if they wish to reclaim VAT on expenses or work with VAT-registered clients Nonresident businesses, digital service providers, and those importing goods or holding inventory in a foreign country often face additional obligations, including security deposits or multi-jurisdiction registration
Failing to register when required can lead to penalties, backdated tax liabilities, and compliance issues. Therefore, understanding the thresholds, required documentation, and ongoing legal duties is essential for any business engaging in taxable activities subject to VAT.