Lula has welcomed today’s National Budget Speech (25 February 2026) which included an announcement that the compulsory VAT registration threshold would increase from R1-million to R2,3-million, a reform for which the SME funder has consistently advocated.
Lula made a formal submission to Treasury in October last year for this to be increased to R3-million. The company’s chief risk officer Garth Rossiter says the increase to R2.3m represents a significant victory for the sector and a clear signal that National Treasury is responding to the strategic advocacy for more pragmatic SME tax policies.
“For years, the R1-million threshold acted as a glass ceiling for growth. Many small businesses deliberately capped turnover to avoid the administrative and cash-flow burden of VAT compliance. Raising the threshold is a practical, pro-growth reform that will immediately unlock productivity in the SME sector.
“This reform gives SMEs breathing room to scale without being pushed into compliance costs that often outweigh marginal revenue gains. Over time, that growth will translate into higher corporate tax receipts, more employment and stronger economic participation,” he says.
Rossiter also welcomed the Budget’s continued emphasis on fiscal discipline, infrastructure investment and structural reform, noting that SMEs need both policy certainty and reliable delivery of the “basics” – energy, water and logistics – to thrive.
“A business-friendly budget is the most sustainable way to build investor confidence. If we fix the tax environment and guarantee core infrastructure, SMEs will do the heavy lifting of job creation.”