SARS directs schools to apply for VAT deregistration following tax exemption changes

Posted 07 August 2026 Written by Acts Online
Category Tax

Brought to you by SAnews: The South African Revenue Service (SARS) has issued a directive calling on public and independent schools registered under the South African Schools Act, No. 84 of 1996 to submit applications to cancel their Value-Added Tax (VAT) registrations following statutory changes to their tax status.

In terms of the amended provisions of the Value-Added Tax Act, No. 89 of 1991, all supplies made by schools are exempt from VAT with effect from 1 January 2026, except where a school conducts qualifying welfare activities. Consequently, affected schools may not charge VAT or deduct input tax on supplies made on or after 1 January 2026, and must submit corrected VAT returns for any periods from that date where tax was incorrectly declared.

Deregistration procedure and exit VAT obligations

To effect the cancellation of vendor status, SARS requires school administrators and tax representatives to adhere to the following directives:

  • Form VAT123e filing: Complete Form VAT123e (Application for Cancellation of Registration), explicitly stating the reason for cancellation as: “All enterprise activities have ceased on 31 December 2025”.
  • Submission channels: Submit the completed form via email to [email protected] using the subject line “VAT deregistration – Schools”, or schedule an appointment via the SARS eBooking system under the category “Other” and reason “VAT and PAYE registration/deregistration”.
  • Exit VAT settlement: Where exit VAT is payable under section 8(2) of the VAT Act upon the cessation of enterprise activities, schools must declare and pay the output tax. Schools facing cash flow constraints may submit a formal request for payment arrangements together with the VAT123e submission. Deregistration will only be finalized once exit VAT is fully settled or an agreed deferred payment plan is satisfied.
  • Welfare activity exception: Schools seeking to maintain VAT vendor status for qualifying welfare activities must apply for and secure written confirmation from the Commissioner by way of a formal binding ruling.

What this means for you, your business, or your clients

  • For yourself: No direct individual tax obligations; personal impact applies only if serving in a fiduciary capacity on a school governing body or managing school tax affairs.
  • For your business: Accounting and auditing practices advising educational institutions must audit client VAT accounts for periods from 1 January 2026 onward, reverse incorrect input tax deductions, and accurately calculate exit VAT liabilities on school assets.
  • For your clients: School governing bodies and finance teams must immediately execute Form VAT123e, accurately declare exit VAT liabilities, and apply for SARS payment arrangements where necessary to avoid compliance penalties.

Originally published at https://www.sanews.gov.za/south-africa/sars-urges-schools-apply-vat-deregistration

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