Small Business Tax Rates in South Africa 2026/2027: Complete Guide
Understanding the tax rates that apply to your small business is essential for financial planning and compliance. The rate you pay depends on your business structure, turnover, and whether you qualify for small business concessions. This guide covers every rate that affects small businesses in the 2026/2027 tax year.
Tax Rates by Business Structure
The table below shows which tax rate applies based on your business structure:
| Business Structure | Tax System | Effective Rate Range |
|---|---|---|
| Sole Proprietorship | Personal Income Tax | 18% – 45% |
| Private Company (Pty) Ltd | Corporate Income Tax | 27% flat |
| Small Business Corporation (SBC) | SBC Progressive | 0% – 27% (progressive) |
| Micro Business (turnover < R1M) | Turnover Tax (optional) | 0% – 3% of turnover |
| Close Corporation (CC) | Corporate Income Tax | 27% flat (or SBC rates if eligible) |
Small Business Corporation (SBC) Tax Rates
A Small Business Corporation (SBC) qualifies for reduced tax rates on the first R550,000 of taxable income. To qualify, the company must:
- Be a private company (Pty) Ltd or CC
- Have gross income of R20 million or less per year
- Be owned entirely by natural persons (no other companies as shareholders)
- Not derive more than 20% of income from personal services (e.g. consulting) unless it employs at least 3 full-time employees
SBC Tax Rates — 2026/2027 (year ending between 1 April 2026 and 31 March 2027)
| Taxable Income | Rate of Tax |
|---|---|
| R0 – R99,000 | 0% |
| R99,001 – R365,000 | 7% of taxable income above R99,000 |
| R365,001 – R550,000 | R18,620 + 21% of taxable income above R365,000 |
| R550,001 and above | R57,470 + 27% of taxable income above R550,000 |
Example SBC calculation:
R400,000 taxable income → R18,620 + 21% x (R400,000 - R365,000) = R18,620 + R7,350 = R25,970 total tax
Effective rate: 6.5%. Compare to 27% (R108,000) under standard corporate rates — saving R82,030.
Standard Corporate Tax Rate
Companies that do not qualify as SBCs pay a flat rate of:
27% of taxable income
This applies to most standard private companies (Pty) Ltd, public companies, and close corporations that do not meet the SBC criteria.
Personal Income Tax Brackets (Sole Proprietors)
Sole proprietors and freelancers pay tax at personal income tax rates. For the 2026/2027 tax year (1 March 2026 – 28 February 2027):
| Taxable Income | Rate of Tax |
|---|---|
| R0 – R245,100 | 18% of taxable income |
| R245,101 – R383,100 | R44,118 + 26% above R245,100 |
| R383,101 – R530,100 | R79,998 + 31% above R383,100 |
| R530,101 – R695,700 | R125,568 + 36% above R530,100 |
| R695,701 – R887,100 | R185,184 + 39% above R695,700 |
| R887,101 – R1,878,600 | R259,830 + 41% above R887,100 |
| R1,878,601 and above | R666,501 + 45% above R1,878,600 |
Tax rebates (2026/2027): Primary: R17,235. Secondary (65+): R9,444. Tertiary (75+): R3,144.
Turnover Tax Rates (Micro Businesses)
Eligible micro businesses with annual turnover below R1 million can elect turnover tax:
| Annual Turnover | Tax Payable |
|---|---|
| R0 – R335,000 | R0 |
| R335,001 – R500,000 | 1% of turnover above R335,000 |
| R500,001 – R750,000 | R1,650 + 2% of turnover above R500,000 |
| R750,001 – R1,000,000 | R6,650 + 3% of turnover above R750,000 |
See our detailed comparison: Turnover Tax vs VAT in South Africa.
VAT Thresholds and Rate
| Item | Value |
|---|---|
| Standard VAT rate | 15% |
| Mandatory registration threshold | R1 million turnover in 12 months |
| Voluntary registration threshold | R50,000 turnover in 12 months |
| Zero-rated supplies | Exports, brown bread, maize, petrol, etc. |
Other Tax Rates for Small Businesses
| Tax Type | Rate | Details |
|---|---|---|
| Capital Gains Tax (company) | 21.6% effective (80% inclusion x 27%) | On sale of business assets |
| Dividends Tax | 20% | Withheld on dividends paid to shareholders |
| UIF (employer + employee) | 2% total (1% each) | Capped at R354.24 per employee per month |
| SDL | 1% of payroll | Only if payroll exceeds R500,000 per year |
Need Help Understanding Your Tax Rate?
Tanosa Group helps small businesses in Bloemfontein and the Free State calculate their tax liability, choose the right structure, and stay compliant with SARS.
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