Question 1

What is Turnover Tax in South Africa?

Accepted Answer

Turnover Tax is a simplified tax system for small businesses with annual turnover up to R2.3 million (from 1 April 2026). Instead of paying Income Tax, VAT, Provisional Tax, Capital Gains Tax, and Dividends Tax separately, you pay a single tax calculated as a small percentage of your total receipts. The rates are graduated from 0% on the first R600,000 to a maximum of 3% on amounts above R1.4 million.

Question 2

Who qualifies for Turnover Tax?

Accepted Answer

Sole proprietors, partnerships, companies, close corporations, and cooperatives with annual turnover up to R2.3 million. You are disqualified if more than 20% of your income comes from professional services (accounting, law, health, engineering, consulting, IT, etc.), if you are a personal service provider or labour broker, or if you have disposed of immovable property exceeding R1.5 million in the last 3 years.

Question 3

How much can I save with Turnover Tax?

Accepted Answer

It depends on your profit margin. At R1.5 million turnover with a 30% profit margin, your Income Tax would be roughly R40,000-R60,000 while your Turnover Tax would be R15,500. Plus you eliminate VAT returns (saving R6,000-R30,000 in compliance costs). The lower your profit margin, the more you save with Turnover Tax.

Question 4

What taxes does Turnover Tax replace?

Accepted Answer

Turnover Tax replaces five separate taxes: Income Tax (normal tax), Value-Added Tax (VAT), Provisional Tax, Capital Gains Tax (CGT), and Dividends Tax. You file a single Turnover Tax return instead of managing multiple tax obligations.

Question 5

Can I switch from VAT to Turnover Tax?

Accepted Answer

Yes, but you will need to deregister from VAT first, which triggers exit VAT on your business assets (Section 8(2) of the VAT Act). However, businesses switching to Turnover Tax receive a R100,000 reduction in their exit VAT deemed consideration under Section 10(5A). Use our VAT Deregistration Calculator to see what this would cost.

Question 6

What are the Turnover Tax rates for 2026?

Accepted Answer

The 2026 rates are: 0% on the first R600,000, 1% on R600,001 to R950,000 (max R3,500), 2% on R950,001 to R1,400,000 (max R12,500), and 3% on R1,400,001 to R2,300,000 (max R39,500). These rates were updated in the 2026 Budget - the first change since 2009.

Question 7

Can I go back to normal tax if Turnover Tax doesn't work for me?

Accepted Answer

Yes, you can opt out of Turnover Tax. However, once you leave the Turnover Tax system, you cannot re-register for it (Sixth Schedule, paragraph 3 of the Income Tax Act). This is a one-way door, so consider carefully before switching.

Question 8

How do I register for Turnover Tax?

Accepted Answer

Apply to SARS via eFiling or at a SARS branch. You will need to elect Turnover Tax for the year of assessment. Your year of assessment must end on the last day of February. Interim payments are due in August and February.

Taxable turnover	Rate of tax	Tax at top of bracket
R0 - R600,000	0%	R0
R600,001 - R950,000	1% of amount above R600,000	R3,500
R950,001 - R1,400,000	R3,500 + 2% of amount above R950,000	R12,500
R1,400,001 - R2,300,000	R12,500 + 3% of amount above R1,400,000	R39,500

Turnover Tax Calculator South Africa

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2026/27 Turnover Tax Rate Table

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