Corporate Income Tax
For the 2025 tax year, companies in South Africa generally pay a flat corporate tax rate of 28% on taxable income. Exceptions apply:
- Small Business Corporations (SBCs): Pay graduated rates with lower thresholds, resulting in a reduced overall tax burden.
- Micro‑businesses under turnover tax: Subject to a different system (see article 29).
Provisional Tax
Provisional tax is not a separate tax, but a method of spreading income tax payments over the year. It applies to companies and individuals who do not earn all their income through fixed salaries (e.g., self-employed businesses).
Key Points
- Two Primary Instalments:
- First: Due six months after the start of the financial year (e.g. end of August for a March year‑end).
- Second: Due at the end of the financial year (e.g. end of February).
- Third Payment (Optional): Within six months of year‑end, used to top up any underestimation.
- Estimate Taxable Income: Provide your best estimate of annual taxable income on each provisional return.
- Penalties: Underestimation penalties apply if your estimates are too low (generally below 80% of actual taxable income).
Tips for Businesses
- Work with a tax professional to accurately estimate your taxable income.
- Pay provisional tax on time to avoid interest.
- Maintain updated records to ensure your estimates align with actual performance.