SARS Business Tax 2026/2027 — Guide to CIT, SBCs, Turnover Tax & ITR14
All companies resident in South Africa — including private companies (Pty Ltd) and close corporations — pay income tax on their taxable income under the Income Tax Act 58 of 1962. The standard Corporate Income Tax (CIT) rate is 27%, unchanged for 2026/2027. However, qualifying small businesses pay significantly less under the Small Business Corporation (SBC) or Turnover Tax regimes.
🏦 Small Business Corporation (SBC)
Progressive rates — 0% to 27% on first R550,000.
Qualifies if gross income ≤ R20m + all individual shareholders.
🏪 Micro business
Revenue under R2.3 million: Turnover Tax option.
Simplified tax replacing CIT, provisional tax, CGT.
Corporate Income Tax (CIT) — 27% standard rate
Years of assessment ending 1 April 2026 – 31 March 2027 (no change from prior year).
Source: SARS Budget 2026 FAQ — sars.gov.za. The rate was reduced from 28% to 27% in 2022/23.
What companies pay CIT: All companies registered and tax-resident in South Africa pay CIT on their worldwide taxable income. Non-resident companies operating through a branch or permanent establishment in South Africa pay CIT on their South African-source income only.
Taxable income = gross income − exempt income − allowable deductions
Key deductible expenses include: cost of sales, salaries and wages, rent, interest on business debt, marketing costs, professional fees, and depreciation under SARS wear-and-tear allowances. The deduction must be incurred in the production of income.
Companies approved to operate within a designated Special Economic Zone may qualify for a reduced CIT rate of 15%, subject to requirements. Budget 2026 proposed reforming the anti-avoidance rules to allow more legitimate supply chain integration within SEZs. (Source: SARS Budget 2026 FAQ)
CIT applies to taxable income (profit after allowable deductions), not revenue. A company with R5 million in revenue but R4.5 million in deductible expenses pays 27% on R500,000 of taxable income = R135,000 CIT.
| Worked Example | |
|---|---|
| Revenue | R5,000,000 |
| Allowable deductions | (R4,200,000) |
| Taxable income | R800,000 |
| CIT at 27% | R216,000 |
Small Business Corporation (SBC) tax rates (2026/2027)
What is an SBC? A Small Business Corporation (SBC) is a company that qualifies for a progressive, lower-rate tax structure under Section 12E of the Income Tax Act. Instead of paying 27% flat on all taxable income, an SBC pays 0% on the first R99,000 of taxable income, with progressive rates up to 27%.
SBC tax rates — 2026/2027
| Taxable income | Tax rate |
|---|---|
| R0 – R99,000 | 0% (tax-free) |
| R99,001 – R365,000 | 7% of amount above R99,000 |
| R365,001 – R550,000 | R18,620 + 21% of amount above R365,000 |
| Above R550,000 | R57,470 + 27% of amount above R550,000 |
Source: SARS Budget 2026 FAQ — sars.gov.za (years of assessment ending 1 April 2026 – 31 March 2027)
SBC qualification criteria (ALL must be met):
- All shareholders are natural persons (no companies or trusts as shareholders)
- Gross income does not exceed R20 million for the year of assessment
- No shareholder holds shares in another company (other than listed companies, venture capital companies, or companies in which the SBC itself holds shares)
- No more than 20% of gross income consists of investment income (interest, dividends, royalties, rental from immovable property) or income from personal services
- The company is not a personal service provider
Source: Section 12E of the Income Tax Act 58 of 1962; PwC Tax Summaries SA
| Worked example — SBC with R400,000 taxable income | |
|---|---|
| Tax on R0 – R99,000 | R0 (0%) |
| Tax on R99,001 – R365,000: 7% × R266,000 | R18,620 |
| Tax on R365,001 – R400,000: 21% × R35,000 | R7,350 |
| Total SBC tax | R25,970 |
| Compare: standard CIT at 27% would be | R108,000 |
| Tax saving as an SBC | R82,030 |
Your company must meet the qualification criteria every year. If any shareholder holds interests in more than one company, or if the gross income ceiling is exceeded, SBC status is lost for that year of assessment and the standard 27% rate applies.
Full SBC qualification guide →
Turnover Tax — the simplified option for micro businesses
What it is: Turnover Tax is a simplified tax system available to small businesses with annual qualifying turnover not exceeding R2.3 million (effective 1 March 2026, increased from R1 million — a major Budget 2026 change). It replaces Corporate Income Tax (CIT), Provisional tax, and Capital Gains Tax (CGT).
Source: SARS Small Businesses page — sars.gov.za
Source: SARS Small Businesses page (20 March 2026)
Turnover Tax rates (from 1 March 2026)
| Annual turnover | Rate |
|---|---|
| R0 – R600,000 | 0% (tax-free) |
| R600,001 – R1,000,000 | 1% of amount above R600,000 |
| R1,000,001 – R1,500,000 | R4,000 + 2% of amount above R1,000,000 |
| R1,500,001 – R2,300,000 | R14,000 + 3% of amount above R1,500,000 |
Turnover tax calculator → Register for Turnover Tax →
How to file your company tax return (ITR14)
What the ITR14 is: The ITR14 is South Africa's annual corporate income tax return. All companies registered with SARS must submit an ITR14 after each financial year-end, regardless of whether any tax is payable.
Example: company with a 28 February financial year-end → ITR14 due by 28 February the following year.
Source: SARS — Guide to complete the ITR14
Company size categories for ITR14
SARS classifies companies into three categories, which affects the level of disclosure required:
| Category | Criteria |
|---|---|
| Micro business | Qualifying turnover ≤ R1 million; total assets ≤ R5 million |
| Small business | Total assets ≤ R10 million; gross income ≤ R20 million |
| Medium to large business | All others |
5-step filing process
- Activate CIT on your eFiling profile Must be done before requesting the ITR14.
- Log in to eFiling Navigate to: Returns → Returns Issued → Income Tax (ITR14).
- Select the correct year of assessment and request the return.
- Complete the ITR14 Income, deductions, capital allowances, deferred income, applicable elections (SBC, provisional tax offset, etc.).
- Submit before the 12-month deadline.
SARS updated the ITR14 from 28 February 2026 with new validation questions covering:
- Credit agreements and debtors' allowance (Section 24)
- Learnership agreement deductions (only for agreements entered before 1 April 2024)
- R&D tax incentive qualification (Department of Science and Innovation approvals)
- Section 12BA deduction (125% allowance for renewable energy assets)
- REIT distribution validation
Beneficial ownership disclosure: The ITR14 requires disclosure of the company's beneficial owners for the 2022 year of assessment and later. This is a mandatory anti-avoidance measure.
Dividends tax
20%When a South African resident company declares and pays a dividend, it must withhold dividends tax at 20% and pay it to SARS. The tax is withheld by the company and paid to SARS on the shareholder's behalf — the shareholder receives the dividend net of dividends tax.
Who is exempt from dividends tax?
- South African resident companies (inter-company dividends)
- Retirement funds
- Approved public benefit organisations (PBOs)
The recipient must submit an exemption declaration to the paying company before payment.
Key tax deductions for companies
Companies reduce taxable income by deducting legitimate business expenses from gross income. The general deduction formula (Section 11 of the Income Tax Act) allows deductions for expenses incurred in the production of income, provided they are not of a capital nature.
-
Operating expenses
Salaries and wages, rent, utilities, professional fees, marketing, insurance — deductible in the year incurred. -
Wear and tear / depreciation (Section 11(e))
Assets used in the business are depreciated over their effective lives using SARS wear-and-tear tables. Not the same as accounting depreciation — use SARS-prescribed rates. -
Capital allowances on manufacturing assets (Section 12C)
New and unused machinery or plant used in a process of manufacture: accelerated write-off. -
Renewable energy (Section 12BA) Updated 2026
Companies that bring renewable energy assets into use can claim a 125% deduction of the cost. The ITR14 was updated in 2026 to capture Section 12BA claims. -
Research and development (Section 11D)
Companies with approved R&D projects can claim enhanced deductions. SARS updated the ITR14 in 2026 with new R&D qualification questions. -
Assessed losses carried forward
If a company's allowable deductions exceed its income, the resulting assessed loss is carried forward and offsets future income. Rules apply — losses from certain "ring-fenced" activities may not be carried forward indefinitely. -
Learnership agreements (Section 12H) 2026 restriction
Deductions are available for companies with registered learnership agreements. From 2026: only agreements entered into before 1 April 2024 qualify.
- Capital expenditure (although capital allowances may apply separately)
- Expenses of a private or domestic nature
- Fines, penalties, and bribes
- Dividends paid (these are distributions of profit, not deductions)
Provisional tax — all companies must pay
All companies are automatically provisional taxpayers — there is no separate registration. Companies must make two mandatory provisional tax payments (IRP6) per financial year:
Within 6 months
(e.g. 31 Aug)
Year-end
(e.g. 28 Feb)
6 months later
(e.g. 31 Aug)
Provisional tax complete guide → IRP6 form guide →
Global Minimum Tax — Pillar Two (GloBE)
Applies to: MNE groups with consolidated annual revenue of EUR 750 million or more.
Effective from: Fiscal years beginning on or after 1 January 2024.
GloBE registration: New: From 16 March 2026 SARS launched GloBE registration on eFiling from 16 March 2026.
Source: PwC Tax Summaries SA; SARS
Frequently Asked Questions
Related guides
Business Tax Cluster
Related Pillars
Sources and references
All business tax information on this page is sourced from, or verified against, the following official and authoritative references:
- Income Tax Act 58 of 1962 — Sections 11, 11(e), 11D, 12BA, 12C, 12E, 12H
- SARS — Corporate Income Tax — sars.gov.za/businesses-and-employers/corporate-income-tax-cit/ (updated March 2026)
- SARS — Budget 2026 — sars.gov.za/about/sars-tax-and-customs-system/budget/ (May 2026) — CIT and SBC rates confirmed
- SARS — Guide to complete the ITR14 (IT-ELEC-03-G01) — sars.gov.za/businesses-and-employers/corporate-income-tax-cit/ (May 2026)
- SARS — CIT System Enhancements — Effective 28 February 2026 — sars.gov.za (2 February 2026)
- SARS — Small Businesses and Taxpayers — sars.gov.za/businesses-and-employers/small-businesses-taxpayers/ (20 March 2026)
- SARS — Companies, Trusts and Small Business Corporations — sars.gov.za/tax-rates/income-tax/companies-trusts-and-small-business-corporations-sbc/
- PwC Tax Summaries — South Africa — Corporate — taxsummaries.pwc.com/south-africa/Corporate/Taxes-on-corporate-income (corporate taxes; dividends tax; Global Minimum Tax)
- SAIT — A Complete Guide to Navigating Corporate Tax in South Africa — thesait.org.za (April 2026)
Last reviewed April 2026 by Solly Maanaso, CA(SA). Next review: after Budget Speech February 2027 — verify CIT rate, SBC rates, and Turnover Tax threshold.
This content is for informational purposes only and does not constitute professional tax advice. Consult a registered tax practitioner for advice specific to your situation.