South African tax declaration and tax advice

South Africa's tax system is levied and managed by the South African Revenue Services (SARS), which covers a variety of taxes and has different regulations for businesses and individuals. The following lists the main tax categories in South Africa and the circumstances under which companies need to register for VAT to help business owners grasp the key points of compliance.

Main types of taxes in South Africa

The following lists the main tax categories in South Africa and the circumstances under which a company needs to register for VAT, to help business owners understand the key points of compliance.

Corporate income tax

Applicable to companies registered in South Africa and foreign companies doing business locally.
The standard tax rate is 27% (applicable from fiscal year 2023).
All for-profit companies are required to file corporate income tax returns (ITR14) annually and pay two provisional taxes based on estimated income.

Personal income tax

Applies to South African tax residents and non-residents deriving income from South Africa.
A tiered tax rate system is adopted, with the highest rate reaching 45%.
Self-employed persons, salaried employees and shareholder dividends are all subject to tax.

Value Added Tax VAT

An indirect tax on goods and services that applies to most transactions.
The standard rate is 15% (it will be adjusted to 15.5% from May 1, 2025 and will be increased to 16% in 2026).
After registering for VAT, enterprises must declare and pay VAT regularly.

Payroll Tax PAYE

Employers withhold income taxes from employees.
Employers are required to submit EMP201 (combined report of payroll tax, UIF and skills development tax) every month and EMP501 report annually.

Unemployment Insurance Fund

The employer and the employee each pay 1% of their salary as UIF.
Applicable to employment relationships, providing employees with basic benefits during unemployment, maternity leave or sick leave.

Under what circumstances does a company need to register for VAT?

Under the Value Added Tax Act (VAT Act), a company must register for VAT with SARS if:

Mandatory registration:

When the business’s taxable supply income exceeds R1,000,000 in a consecutive 12-month period.
Even if you register after reaching the threshold, you must calculate and pay VAT retroactively to the month you reached the target.

Voluntary Registration:

If the annual turnover of a company does not reach R1,000,000 but is expected to exceed R50,000, it can apply for voluntary registration.
Applicable to start-up companies or trading companies with export and import needs.