Taxable Income
RÂ 1Â 000Â 000,00
Tax Payable
RÂ 270Â 000,00
After-Tax Profit
RÂ 730Â 000,00
Effective Rate
27.0%
The standard corporate income tax rate in South Africa is 27% (reduced from 28% for years ending on or after 31 March 2023).
Small Business Corporations (SBCs) with qualifying turnover under R20 million benefit from progressive rates starting at 0% on the first R95,750.
Companies must also consider Dividends Tax (20%) when distributing profits to shareholders, and may be liable for provisional tax payments during the year.
What is the corporate tax rate in South Africa?
The standard corporate income tax rate is 27% for financial years ending on or after 31 March 2023. This was reduced from 28%.
What is the SBC reduced tax rate?
Small Business Corporations (SBC) with turnover under R20 million and meeting qualifying criteria get reduced rates: 0% on first R95,750, 7% on R95,751-R365,000, 21% on R365,001-R550,000, and 27% above R550,000.
When are provisional tax payments due?
Companies must make two provisional tax payments: the first within 6 months of the start of the tax year, and the second at the end of the tax year. A voluntary third payment can be made within 6 months after year-end.
What is the turnover tax for micro businesses?
Qualifying micro businesses (turnover under R1 million) can opt for turnover tax instead of income tax. Rates range from 0% (first R335,000) to 3% (above R750,000).
How SARS taxes company profits and what small businesses can save with reduced rates
What is the company tax rate in South Africa?
The standard corporate income tax rate is 27% on taxable income. This applies to all companies registered in South Africa, including private companies (Pty Ltd) and public companies. If your company earns R1,000,000 in taxable profit, the tax bill is R270,000, leaving R730,000 after tax.
What are the Small Business Corporation (SBC) tax rates?
Qualifying small businesses with turnover under R20 million get reduced rates. The first R95,750 of taxable income is tax-free. Income from R95,751 to R365,000 is taxed at 7%. Income from R365,001 to R550,000 is taxed at 21%. Everything above R550,000 is taxed at 27%. This means a small company earning R500,000 pays only about R22,653 in tax instead of R135,000.
How does a company qualify for SBC rates?
To qualify as a Small Business Corporation, all shareholders must be natural persons (not other companies), turnover must be under R20 million, the company must not be a personal service provider, and not more than 20% of income can come from investment income, professional fees, or rental income. All requirements must be met throughout the tax year.
When does a company need to pay provisional tax?
Companies pay provisional tax in two instalments. The first payment is due 6 months after the start of the financial year. The second payment is due at the end of the financial year. A voluntary third payment can be made within 6 months after year-end to avoid interest. Each instalment should be at least half the estimated total tax for the year.
What expenses can a company deduct?
Companies can deduct all expenses incurred in the production of income. This includes salaries, rent, utilities, professional fees, insurance, marketing costs, and depreciation on assets. Section 11(a) of the Income Tax Act allows deduction of expenditure actually incurred and not of a capital nature. Capital expenses are claimed through wear-and-tear allowances.
What is dividends tax and how does it relate to company tax?
After paying 27% company tax, profits distributed as dividends attract a further 20% dividends tax. This is withheld by the company. On R1,000,000 profit: R270,000 goes to company tax, leaving R730,000. If distributed, R146,000 dividends tax is withheld, and shareholders receive R584,000. The combined effective rate is 41.6%.
Does a company need to register for VAT?
Companies must register for VAT if their taxable turnover exceeds R1 million in a 12-month period. Voluntary registration is possible if turnover exceeds R50,000. VAT-registered companies charge 15% on sales and can claim back VAT on business purchases. VAT returns are filed every two months.
What is the difference between turnover tax and company tax?
Micro businesses with turnover up to R1 million can choose turnover tax instead of company tax. Turnover tax is simpler — you pay a percentage of turnover (0% on the first R335,000, then 1% to 3% on higher amounts) with minimal record-keeping. However, you cannot claim VAT input credits or deduct individual expenses. Most growing businesses prefer the normal company tax system.
SARS-Aligned: Based on 2025 SARS rates and thresholds. For personal advice, speak to a qualified tax practitioner.
Disclaimer: This calculator provides estimates based on current HMRC rates and thresholds for the 2025/26 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant or tax adviser before making financial decisions. Read our terms
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