ACCA Taxation F6 Practice Exam 2026 – Complete Study Resource

A business typically differentiates between registered and non-registered for VAT primarily based on annual revenue. This threshold is set by tax authorities to identify which businesses exceed a certain turnover limit that requires them to register for VAT. When a business's taxable turnover surpasses this threshold, it becomes obligated to register for VAT and charge VAT on its sales.

The rationale behind this approach is to simplify compliance for smaller businesses and to ensure that only those businesses that have significant transactions and are likely generating a considerable amount of taxable supplies are required to act as VAT collectors for the government. In many jurisdictions, the annual revenue threshold is clearly defined, and it simplifies the registration process, focusing on financial capacity rather than other criteria.

The other options—such as the number of employees, the type of products sold, or the geographical location—do not generally serve as the main criteria for determining VAT registration. While these factors may play a role in other regulatory or taxation contexts, they are not the principal determinants for VAT registration under most systems.