Company Tax in South Africa: Everything You Need to Know

Running a business in South Africa comes with responsibilities – and one of the biggest is company tax. Understanding how it works will save you money, keep you compliant with SARS, and help you plan your finances better.

In this guide, we’ll cover what company tax is, who needs to pay it, how it’s calculated, practical examples, applications, and frequently asked questions.

South African Company Tax Calculator (2026)

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What is Company Tax in South Africa?

Company tax (also called corporate income tax) is a tax charged on the profits of registered companies in South Africa. As of 2025, the company tax rate is 27% for all companies except small business corporations (SBCs), which may qualify for a reduced rate.

Who Must Pay Company Tax?

  • Private Companies (Pty) Ltd

  • Public Companies (Ltd)

  • Close Corporations (CCs) – though no longer registered, existing ones still pay tax

  • Small Business Corporations (SBCs)

  • Trusts (taxed differently, but still under corporate rules)

  • Branches of foreign companies operating in SA

👉 Note: Sole proprietors and partnerships do not pay company tax. They pay personal income tax instead.

Current Company Tax Rates in South Africa (2025)

  • Standard Company Tax Rate: 27%

  • Small Business Corporation (SBC) Rates 2025/2026:

    • 0% on the first R95,750 taxable income

    • 7% on income from R95,751 – R365,000

    • 21% on income from R365,001 – R550,000

    • 27% on income above R550,000

How to Calculate Company Tax (Practical Example)

Example:
XYZ Pty Ltd makes a profit of R1,000,000 after deducting business expenses.

  1. Taxable income = R1,000,000

  2. Apply company tax rate of 27%

  3. Company tax payable = R270,000

👉 If XYZ qualified as a Small Business Corporation (SBC) with the same income, the tax calculation would be:

  • R0 on the first R95,750 = R0

  • 7% on R269,250 (95,751 – 365,000) = R18,847.50

  • 21% on R185,000 (365,001 – 550,000) = R38,850

  • 27% on R450,000 (550,001 – 1,000,000) = R121,500

✅ Total SBC tax = R179,197.50

That’s a saving of over R90,000 compared to the standard 27% rate.

How to File and Pay Company Tax in South Africa

  1. Register with SARS when you incorporate your company with CIPC.

  2. Submit Provisional Tax returns twice a year (August & February).

  3. Submit Final ITR14 (company income tax return) after year-end.

  4. Pay the tax via SARS eFiling or at an approved bank.

Why Company Tax is Important

  • Funds government services and infrastructure

  • Keeps your business legally compliant

  • Allows access to tenders, funding, and investment opportunities

  • Helps businesses build credibility with banks and clients

Company Tax Calculator

Easily estimate your company tax liability using our online calculator:

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Applications of Company Tax Knowledge

  • Startups & Entrepreneurs – know whether you qualify for SBC tax savings.

  • Established Businesses – plan ahead for tax liabilities.

  • Investors – understand after-tax returns on company profits.

  • Accountants & Tax Consultants – use it in client advisory.

10 Frequently Asked Questions (FAQs)

1. What is the company tax rate in South Africa?

The standard rate is 27%, while small business corporations qualify for reduced rates.

2. When must companies pay tax?

Companies pay provisional tax twice a year and a final tax after submitting ITR14.

3. Do small businesses pay less company tax?

Yes. SBCs enjoy progressive tax rates that reduce liability for startups and SMEs.

4. How do I register my company for tax?

Registration is automatic when you register with CIPC, but you must still activate your SARS eFiling profile.

5. Can a company operate without paying tax?

No. All companies are legally required to pay tax on profits. Failure can lead to penalties.

6. Are losses taxable?

No. If your business makes a loss, no tax is due. Losses can be carried forward to offset future profits.

7. Do trusts pay company tax?

Trusts are taxed differently, but they fall under the corporate tax system. Rates are higher (up to 45%).

8. What happens if a company doesn’t pay tax?

SARS may issue penalties, interest, and even legal action against the directors.

9. Can I deduct business expenses before tax?

Yes. Legitimate expenses (rent, salaries, equipment, utilities, etc.) are deductible.

10. How can I reduce my company tax legally?

  • Use SBC rates if eligible

  • Claim all business deductions

  • Use allowances (e.g., wear-and-tear, R&D deductions)

  • Work with a tax consultant for planning

Final Thoughts

Company tax in South Africa can feel complicated, but with the right planning and tools, you can manage it effectively. Whether you run a startup, an established firm, or a trust, understanding tax rates and calculations is crucial to keep your business compliant and profitable.

👉 Use our Company Tax Calculator above to estimate your tax today and plan better for the future.