Understanding Corporate Tax in South Africa – A Complete Guide

Businesses are subject to different forms of taxation depending on their size, structure, and industry. Below is a breakdown of the main corporate taxes in South Africa:

1. Corporate Income Tax (CIT)
   1. Current rate: 27% for companies with financial years ending on or after 31 March 2023.

   2. Applies to the net profit of the company (income minus allowable expenses).

   3. Provisional tax payments are required twice a year, with a final top-up payment after year-end.
2. Value-Added Tax (VAT)

   1. Standard rate: 15%.

   2. Mandatory if your business turnover exceeds R1 million per year.

   3. Voluntary registration available from R50,000 per year.

   4. VAT returns (VAT201) are submitted monthly or bi-monthly.

3. Capital Gains Tax (CGT)
   1. Applies when a company disposes of assets (property, shares, investments).
   2. 80% of the capital gain is included in taxable income, taxed at the corporate rate of 27%.
4. Dividends Tax
   1. Flat rate of 20% on dividends paid to shareholders.
   2. Withheld by the company before distribution.
5. Employees’ Taxes (PAYE, UIF, SDL)
   1. PAYE (Pay-As-You-Earn): Deducted from employee salaries and paid to SARS.
   2. UIF (Unemployment Insurance Fund): 1% employee + 1% employer contribution.
   3. SDL (Skills Development Levy): 1% of total payroll (if annual payroll exceeds R500,000).
6. Turnover Tax (for Small Businesses)
   1. Simplified tax system for small businesses with annual turnover less than R1 million.
   2. Replaces Income Tax, VAT, Provisional Tax, CGT, and Dividends Tax with a single tax.
7. Mining & Petroleum Taxes
   1. Special corporate tax rules apply to businesses in the mining and petroleum industries.