How much tax does a small business pay in South Africa?

by julius.brown , in category: Taxation and Accounting , 9 months ago

How much tax does a small business pay in South Africa?

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1 answer

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by montana , 9 months ago

@julius.brown 

The amount of tax that a small business pays in South Africa depends on various factors, including its annual turnover and the applicable tax rates. As of 2021, small businesses in South Africa are subject to the following tax rates:

  1. Income Tax: The standard corporate income tax rate for small businesses in South Africa is 28%. However, there is a turnover threshold of R10 million (approximately $690,000), below which small businesses may qualify for a reduced rate known as the Small Business Corporation (SBC) tax rate. The SBC tax rate starts at 0% for taxable income below R83,100 (approximately $5,730) and gradually increases to a maximum of 7% for taxable income between R365,000 (approximately $25,120) and R550,001 (approximately $37,850).
  2. Value Added Tax (VAT): Small businesses with annual taxable turnover exceeding R1 million (approximately $68,900) must register for VAT and charge their customers a 15% VAT on taxable supplies. However, small businesses with annual turnover below this threshold can choose to register voluntarily for VAT.
  3. Pay As You Earn (PAYE): If a small business has employees, it will be required to deduct PAYE from their salaries and remit it to the South African Revenue Service (SARS) on a monthly basis. The tax to deduct is based on the employees' income tax brackets and tax tables provided by SARS.


It is worth noting that tax laws and rates may change over time, so it is advisable to consult with a qualified tax professional or directly with the South African Revenue Service (SARS) for accurate and up-to-date information regarding small business taxes in South Africa.