· Built around the Small business corporation tax calculator
Photo: Karola G on Pexels (free licence)
South Africa has two tax breaks built for small businesses, and most owners have heard of neither until their accountant mentions them. A small business corporation (SBC) is a company taxed on a sliding scale instead of a flat 27%. Turnover tax lets a micro business - company or sole proprietor - pay a small percentage of its takings instead of tax on profit. This post works both on the SARS tables for 2026/27 and shows which one suits which kind of business. The SBC tax calculator and the turnover tax calculator run your own numbers.
Run your own numbers
Type the company's taxable income (its profit for tax) for the year. The calculator shows the SBC tax, the ordinary 27% tax and the difference.
The SBC table for 2026/27
For years of assessment ending between 1 April 2026 and 31 March 2027 (SARS, changed 25 February 2026):
- R1 to R99 000: 0%. Up from R95 750 the year before.
- R99 001 to R365 000: 7% of the amount above R99 000.
- R365 001 to R550 000: R18 620 + 21% of the amount above R365 000.
- Above R550 000: R57 470 + 27% of the amount above R550 000.
- An ordinary company pays 27% of every rand, unchanged for 2026/27.
Checked against a published example
- R400 000 taxable income: R25 970 SBC tax, R108 000 at 27%, R82 030 saved - Xero's worked example on the 2026/2027 table (14 August 2026).
- CalcSA gives the same three figures: R18 620 + 21% of R35 000 = R25 970, effective 6.5%. Run it in the calculator above - it is pre-filled with R400 000.
- The same Xero page quotes R57 698 as the SBC tax at R550 000. That is the old 2025/26 figure; on the 2026/27 table it is R57 470 - check the year on any table you use.
What the sliding scale is worth
- R99 000 profit: R0 tax instead of R26 730.
- R250 000: R10 570 (7% of R151 000) instead of R67 500.
- R550 000: R57 470 instead of R148 500 - the saving reaches its maximum of R91 030.
- R800 000: R124 970 instead of R216 000 - still R91 030 saved, so the effective rate climbs towards 27% as profit grows (15.6% here).
Paying the profit out to yourself as a shareholder adds 20% dividends tax on whatever is distributed (dividends tax calculator). Whether to take a salary or dividends from your own company is its own sum - the salary or dividend calculator works it.
Who qualifies as an SBC
- A private company, close corporation or co-operative with gross income of R20 million or less for the year.
- Every shareholder is a natural person who holds no shares in another company - listed shares and a few others are excepted.
- No more than 20% of income from investments and personal services combined. A one-person consulting company usually fails this test - see the note below.
Photo: Karola G on Pexels (free licence)
Turnover tax: tax on takings, not profit
For a micro business with turnover up to R2.3 million a year (from 1 April 2026; R1 million before), SARS offers turnover tax instead. The table for years ending 28 February 2027:
- R0 to R600 000: nil. Up from R335 000 the year before.
- R600 001 to R950 000: 1% of the amount above R600 000.
- R950 001 to R1 400 000: R3 500 + 2% above R950 000.
- Above R1 400 000: R12 500 + 3% above R1 400 000.
Worked on that table: R1 000 000 turnover pays R4 500, R1 200 000 pays R8 500 (0.7% of takings) and the R2 300 000 maximum pays R39 500 (1.7%). It is paid in two interim payments, at the end of August and the end of February. Run it in the turnover tax calculator.
Which one wins? It depends on your margin
- High margin: turnover tax wins by a mile. R1 200 000 turnover at a 40% margin is R480 000 profit. As an SBC that is R18 620 + 21% of R115 000 = R42 770, plus 20% dividends tax if the rest is paid out. On turnover tax it is R8 500, and turnover tax also replaces dividends tax on the business.
- Low margin: SBC rates can win. The same R1 200 000 turnover at a 5% margin is R60 000 profit - R0 as an SBC, but still R8 500 on turnover tax, because turnover tax does not care whether you made money.
- Know your margin before you choose. The markup and margin calculator turns your prices into a margin, and the break-even calculator shows the turnover where costs are covered.
- Turnover tax also replaces provisional tax for the business. On SBC rates the company pays provisional tax twice a year like any other company.
- VAT is separate. A micro business on turnover tax may stay registered for VAT. Registration is compulsory above R2.3 million of taxable supplies a year from 1 April 2026 (VAT calculator).
Check before you register - not modelled here.
- Personal service businesses are excluded from SBC rates unless they employ at least three full-time employees who are not shareholders or connected to them. Professional services such as consulting, accounting and law are also excluded from turnover tax. Not verified from the primary legislation for this post - confirm with SARS or a registered tax practitioner.
- You may only join or leave turnover tax at certain times, and a business that leaves cannot come back for three years. Not re-read at the primary source for this post.
Sources
- SARS, companies, trusts and small business corporations: SBC tables for years ending 1 April 2026 to 31 March 2027 (R99 000 / 7% / R18 620 + 21% / R57 470 + 27%) and 2025/26, company rate 27%: sars.gov.za, read by CalcSA 16 October 2026.
- SARS, turnover tax tables for years ending 28 February 2027 and 2026: sars.gov.za, read 16 October 2026. Qualifying turnover R2.3 million from 1 April 2026 and the interim payment dates: sars.gov.za turnover tax, as used by the CalcSA turnover tax calculator, checked 15 October 2026.
- Worked example, R400 000 = R25 970 SBC tax, R108 000 at 27%, R82 030 saved: Xero, small business corporation guide, 14 August 2026, read 16 October 2026.
- SBC qualifying tests (s12E Income Tax Act): as summarised by SARS and the CalcSA SBC tax calculator. Dividends tax 20%: sars.gov.za.
- VAT compulsory registration R2.3 million from 1 April 2026: sars.gov.za, read 16 October 2026.
- The 40% and 5% margins in the comparison are examples - type your own into the calculators.
Calculators used in this post
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