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Turnover tax South Africa 2026 rate table and registration guide for micro businesses

Turnover Tax South Africa 2026: Complete SARS Guide

📋 Tax Guides · Budget 2026 Updated

Turnover Tax South Africa 2026: Complete SARS Guide

The Budget 2026 threshold increase means more small businesses now qualify. Here is everything you need to know about rates, registration and calculation.

📅 Updated July 2026 ✅ SARS verified ⏱ 8 min read
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Budget 2026 Change — New R2.3M Threshold Effective 1 April 2026, the turnover tax threshold increased from R1 million to R2.3 million. The tax-free band also increased from R335,000 to R600,000. If your business turnover is between R1 million and R2.3 million, you can now register for turnover tax for the first time.
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Written & Reviewed by: Jack

This guide is compiled from SARS official publications, Budget 2026 documentation, and the SARS Turnover Tax page (last updated 10 April 2026). All rates and thresholds are sourced directly from sars.gov.za.

SARS Sourced Budget 2026 Updated Worked Examples
R2.3M
New threshold (Apr 2026)
R600K
Tax-free band
0–3%
Tax rate range
5
Taxes replaced

What Is Turnover Tax in South Africa?

Short answer: Turnover Tax is a simplified tax system for micro businesses with annual turnover of R2.3 million or less. Instead of calculating taxable profit and claiming deductions, you pay a low percentage of your total receipts. It replaces Income Tax, Provisional Tax, Capital Gains Tax, Dividends Tax and VAT in one simple annual return.

Turnover Tax was introduced by SARS to reduce the administrative burden on very small businesses. Rather than filing multiple returns, tracking deductible expenses and paying provisional tax (advance income tax payments due twice yearly) twice a year, a registered micro business pays a single low-rate tax on its total income received.

The system is calculated on turnover — the total amount your business receives — not on profit. This makes bookkeeping far simpler because you do not need to track every expense or understand complex deduction rules.

What does Turnover Tax replace? For registered micro businesses, Turnover Tax takes the place of:

  • Income Tax (company or personal, on business income)
  • Provisional Tax (the twice-yearly advance payments to SARS before your final return)
  • Capital Gains Tax (CGT) — replaced for micro businesses, with one exception for asset disposals
  • Dividends Withholding Tax — up to R200,000 dividends per year are exempt; dividends above R200,000 remain subject to 20% DWT
  • VAT — for businesses below the R1 million VAT threshold

A micro business registered for Turnover Tax may still elect to remain in the VAT system if it wishes, or if its supplies exceed the R1 million VAT registration threshold.

Who Qualifies for Turnover Tax in 2026?

Short answer: Any sole proprietor, partnership, close corporation (CC), company, or co-operative with a qualifying annual turnover of R2.3 million or less may register. Qualifying turnover excludes capital receipts — such as money received from selling business equipment — and certain government grants.

The following types of businesses may apply to register for Turnover Tax:

  • Sole proprietors (individuals running their own business)
  • Partnerships
  • Close corporations (CCs)
  • Private companies (Pty Ltd)
  • Co-operatives

What counts as qualifying turnover? Your qualifying turnover is the total amount your business receives from trading — but with two important exclusions:

  • All receipts of a capital nature (proceeds from selling business assets such as equipment or vehicles)
  • Certain government grants that are exempt from income tax under the Income Tax Act

This means if your trading income is R2.1 million but you also sold a company vehicle for R400,000, your qualifying turnover is still R2.1 million — well under the R2.3 million limit. You would still qualify.

Registration deadline: Applications to register for Turnover Tax must be submitted by 28 February each year to take effect for the following tax year. As of November 2025, registration can be done digitally via the SARS Online Query System (SOQS) — see Section 7 below.

Who Does NOT Qualify for Turnover Tax?

Short answer: Professional service providers, labour brokers, personal service providers, and businesses engaged in certain excluded activities cannot register for Turnover Tax — regardless of their turnover level. Use the SARS quick test at sars.gov.za to confirm your eligibility before applying.

Even if your turnover is below R2.3 million, SARS excludes certain types of businesses from the Turnover Tax system:

  • Personal service providers — where one person provides services, more than 80% of income comes from one client, and that person would be an employee if not operating through a company
  • Labour brokers — businesses that supply workers to other employers
  • Professional service providers — including attorneys, accountants, architects, engineers, doctors, dentists, and similar regulated professions
  • Businesses where any owner holds an interest in another business that is not a micro business
  • Businesses that earn investment income (interest or royalties) exceeding a certain threshold

If you are unsure whether your business qualifies, use the SARS Turnover Tax quick test — a short decision tree that confirms eligibility based on your specific circumstances.

What Are the Turnover Tax Rates for 2026/27?

Short answer: The 2026/27 turnover tax rates range from 0% to 3%. The first R600,000 of turnover is tax-free. Above that, you pay 1%, then 2%, then 3% only on the marginal amount in each band — not on your full turnover. Maximum tax on R2.3 million turnover is R39,500 (effective rate: 1.72%).
Annual Turnover Rate Tax on Band Cumulative Tax
R0 – R600,000 0% 2026/27 R0 R0
R600,001 – R950,000 1% on amount above R600,000 Max R3,500 Up to R3,500
R950,001 – R1,400,000 R3,500 + 2% on amount above R950,000 Max R9,000 Up to R12,500
R1,400,001 – R2,300,000 R12,500 + 3% on amount above R1,400,000 Max R27,000 Up to R39,500

Source: SARS Turnover Tax — year of assessment ending 1 March 2026 to 28 February 2027.

The maximum possible tax at the R2.3 million threshold is R39,500 — an effective rate of just 1.72% on total turnover. This compares very favourably to the 27% corporate tax rate or progressive individual income tax rates, especially for profitable businesses with low expenses.

How Is Turnover Tax Calculated? — Worked Examples

Short answer: Apply the rate to each band progressively — similar to income tax brackets. Important: use your taxable turnover, not qualifying turnover. Taxable turnover includes 50% of proceeds from disposing of business assets, even though those proceeds are excluded from your qualifying turnover when testing eligibility.

Qualifying turnover vs taxable turnover — the key distinction:

When you sell a business asset (equipment, a vehicle, etc.), the proceeds are excluded from your qualifying turnover when checking whether you meet the R2.3 million eligibility threshold. However, 50% of those proceeds are included in your taxable turnover when calculating the actual tax you owe. This prevents large capital gains from being routed through the low-rate turnover tax system.

📌 Example 1 — Freelance Designer
Turnover: R450,000
Band 1 (0–R600K) @ 0%R0
Total Turnover TaxR0
Effective rate: 0%
📌 Example 2 — Small Retail Shop
Turnover: R800,000
Band 1 (0–R600K) @ 0%R0
Band 2 (R200K above R600K) @ 1%R2,000
Total Turnover TaxR2,000
Effective rate: 0.25%
📌 Example 3 — Growing Small Business
Turnover: R1,800,000
Band 1 (0–R600K) @ 0%R0
Band 2 (R350K above R600K) @ 1%R3,500
Band 3 (R450K above R950K) @ 2%R9,000
Band 4 (R400K above R1.4M) @ 3%R12,000
Total Turnover TaxR24,500
Effective rate: 1.36%
Quick check — R1 million turnover: R0 (on first R600K) + R3,500 (1% on R350K) + R1,000 (2% on R50K above R950K) = R4,500 total tax. Effective rate: 0.45%.

Is Turnover Tax Better Than Normal Tax in South Africa?

Short answer: Turnover Tax is usually better if your business has low operating costs or thin margins — because you pay tax on revenue, not profit, so high-expense businesses pay more. The break-even point is roughly a 5–8% profit margin, depending on your turnover level. Below that margin, turnover tax costs more than normal tax.
Feature Turnover Tax Normal Company Tax SBC Tax
(Small Business Corp)
Tax base Total turnover (receipts) Taxable profit (revenue minus expenses) Taxable profit
Tax rate 0–3% 27% 0–27% graduated
Expense deductions None Full deductions Full deductions
Provisional tax Replaced (two TT02 payments) Required (IRP6 twice yearly) Required
CGT Replaced (50% included in turnover) Applies at 21.6% inclusion rate Applies
Record keeping Minimal — receipts only Full income and expense records Full records required
eFiling return submission eBooking appointment needed Fully on eFiling Fully on eFiling
Best for Low-cost, high-margin businesses High-expense businesses Companies with significant profits

Should you register for Turnover Tax?

✅ Choose Turnover Tax if:
  • Your profit margin is above 15%
  • Your operating costs are low
  • You want minimal bookkeeping
  • You have no large deductible expenses
  • Simplicity is more valuable than optimisation
✗ Stick with Normal Tax if:
  • Your business has high operating costs
  • You run on thin profit margins (under 5%)
  • You have significant capital equipment depreciation
  • You expect to exceed R2.3M soon
  • You prefer eFiling for all returns

Before switching, run the numbers for your specific business. For a free comparison, use the Turnover Tax Calculator at Accounter.co.za which compares turnover tax against estimated normal tax based on your profit margin. Alternatively, consult a registered tax practitioner — for many small businesses the decision is not obvious.

How Do You Register for Turnover Tax in 2026?

Short answer: As of November 2025, you can register digitally via the SARS Online Query System (SOQS) — no branch visit needed. You must register by 28 February to take effect for the tax year starting 1 March. First do the SARS quick test to confirm you qualify, then complete registration on SOQS or submit a TT01 form.
  1. 1
    Do the SARS Quick Test
    Go to the SARS Turnover Tax quick test and answer a series of yes/no questions about your business type and turnover. This confirms in minutes whether you qualify before you invest time in registration.
  2. 2
    Register via SOQS (Recommended — Fully Digital)
    Visit tools.sars.gov.za/sarsonlinequery/turnovertax. As of November 2025, turnover tax registration is integrated into SARS’s Online Query System — it is secure, fast and fully digital. Have your tax reference number and ID ready.
  3. 3
    Alternative: Submit Form TT01 at a SARS Branch
    If you prefer in-person registration, download the TT01 Application for Turnover Tax form, complete it, and book a SARS eBooking appointment. The SOQS route is faster and avoids branch queues.
  4. 4
    Register by 28 February
    Your registration must be submitted by the last business day of February to take effect for the tax year starting 1 March. Miss this deadline and you must wait until the following year. For 2027/28, register by 26 February 2027.
Already on normal tax and want to switch? The same SOQS process applies. You notify SARS of your intention to register for Turnover Tax and the switch takes effect at the start of the next tax year (1 March). Make sure you deregister from provisional tax once the switch is confirmed.

How Do You Submit Returns and Pay Turnover Tax?

Short answer: Turnover tax has three payment moments per year — two interim TT02 payments (August and February) and one final TT03 return (submitted July to January). Returns must be submitted via SARS eBooking appointment or email — they cannot be filed directly on eFiling. Payments can be made via internet banking or at a bank.
Return / PaymentWhenPurpose
TT02 (1st interim) Last business day of August Estimated turnover for first half of year
TT02 (2nd interim) Last business day of February Estimated turnover for full year
TT03 (Annual return) July – January (following year) Actual turnover — final assessment and top-up payment

How to submit the TT03 annual return:

  • Book an appointment via the SARS eBooking system
  • Alternatively, email SARS with your completed TT03 form and supporting documents
  • The TT03 return cannot be submitted directly via eFiling — this is a known limitation of the turnover tax system

How to make payments: Use the TT02 Payment Advice as your reference when paying. Payments can be made via internet banking or at any commercial bank. Always quote the Beneficiary ID and Payment Reference Number shown on your TT02. Keep your TT02 as your own record — do not submit it to SARS.

Important: The TT02 interim payments are estimates based on your projected turnover. If your actual turnover (declared on TT03) is higher, you pay the difference. If lower, SARS will refund or credit the overpayment. Plan your cash flow accordingly, especially if your business income is seasonal.

What Records Must You Keep for Turnover Tax?

Short answer: SARS requires three types of records: all amounts received, dividends declared, and a list of assets and liabilities over R10,000 at year-end. You do not need to track every business expense — this is one of the biggest practical advantages of turnover tax over normal tax.
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All Amounts Received
Every payment received by the business — invoices paid, cash received, EFT receipts. Keep bank statements and invoices as evidence.
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Dividends Declared
If your business declares dividends to shareholders, maintain a record of each dividend declaration and the amount per shareholder.
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Assets and Liabilities Over R10,000
At year-end, prepare a list of all business assets with a cost price above R10,000 (computers, vehicles, machinery) and liabilities exceeding R10,000 (loans, creditors).

SARS provides two free recordkeeping workbook downloads to help:

Even though detailed expense records are not required, it is still good business practice to track your costs. This helps you monitor profitability, identify when turnover tax may no longer be the best option, and manage cash flow for your TT02 interim payments.

All records must be retained for a minimum of 5 years from the date of submission of the relevant return — the same as for all other SARS tax types. For more on record-keeping best practice, see our guide on SARS eFiling and tax compliance.

When Should You Deregister from Turnover Tax?

Short answer: You must deregister within 21 days if your turnover exceeds R2.3 million at any point during the tax year. You can also voluntarily deregister if your business grows rapidly or if you determine that normal tax would result in lower overall tax — for example, after taking on significant deductible expenses.

Compulsory deregistration triggers:

  • Your qualifying turnover exceeds R2.3 million in a tax year — notify SARS within 21 days
  • Your business type changes to one that is excluded (e.g. you become a personal service provider)
  • You acquire an interest in another business that is not a micro business

Voluntary deregistration reasons:

  • Your business is growing and you expect to exceed R2.3 million within the next year
  • You have taken on significant deductible expenses (staff, premises, equipment) making normal tax more efficient
  • You want full eFiling capability for all your tax returns
  • You want to claim input VAT on business purchases

To deregister, notify SARS in writing via the eBooking system or SOQS. The deregistration takes effect at the end of the current tax year (28 February). From 1 March, your business transitions to the normal income tax system — you will need to register for provisional tax and ensure your financial records are ready to support a full income and expense return.

Tip: If you deregister voluntarily, do so before 31 December to give yourself enough time to set up proper bookkeeping and expense tracking for the new tax year starting 1 March. You will need records of all deductible expenses from day one under normal tax. For help with the transition, read our guide on South Africa tax brackets and how income tax is calculated.

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Frequently Asked Questions — Turnover Tax South Africa

What is the turnover tax threshold in South Africa for 2026?+
The turnover tax threshold increased from R1 million to R2.3 million effective 1 April 2026, following the Budget 2026 announcement. The tax-free band also increased to R600,000, meaning businesses with turnover below R600,000 pay zero turnover tax.
Does turnover tax replace VAT in South Africa?+
Yes, turnover tax replaces VAT for businesses below the R1 million VAT registration threshold. However, businesses registered for turnover tax may elect to remain VAT registered if they choose. Businesses with taxable supplies exceeding R1 million must still register for VAT separately.
What is the difference between qualifying turnover and taxable turnover?+
Qualifying turnover (used for eligibility) excludes capital receipts like proceeds from selling business equipment. Taxable turnover (used for calculating tax) includes 50% of those asset disposal proceeds. Your qualifying turnover may be below R2.3 million even if your taxable turnover is slightly higher.
Can I register for turnover tax on SARS eFiling?+
As of November 2025, you can register digitally via the SARS Online Query System (SOQS) at tools.sars.gov.za/sarsonlinequery/turnovertax. However, submitting annual TT03 returns still requires a SARS eBooking appointment — it cannot be filed directly on eFiling.
What happens if my turnover exceeds R2.3 million?+
You must notify SARS and deregister from turnover tax within 21 days of exceeding the R2.3 million threshold. After deregistration, your business moves to the standard tax system — income tax, provisional tax, and potentially VAT registration.
Are professional service providers excluded from turnover tax?+
Yes. Professional service providers (attorneys, accountants, doctors, engineers etc.), personal service providers, and labour brokers cannot register for turnover tax regardless of their turnover level. Use the SARS quick test to confirm your eligibility.
Does turnover tax replace Capital Gains Tax?+
Yes, turnover tax replaces CGT for registered micro businesses. However, 50% of proceeds from disposing of business assets must be included in your taxable turnover. This acts as a substitute for Capital Gains Tax and prevents large gains being sheltered in the lower-rate system.
How much turnover tax do I pay on R1 million turnover in 2026?+
On R1 million annual turnover in 2026/27: R0 on first R600,000 + R3,500 on R600,001–R950,000 at 1% + R1,000 on R950,001–R1,000,000 at 2% = R4,500 total. This is an effective rate of just 0.45%.
Is turnover tax optional or compulsory?+
Turnover tax is completely optional. If your business qualifies, you choose whether to register. Businesses with high operating costs or significant deductible expenses are often better off under normal income tax where expenses reduce taxable profit.
Can I switch back to normal tax after registering for turnover tax?+
Yes. You can voluntarily deregister from turnover tax and return to normal income tax. Notify SARS and the switch takes effect at the end of the current tax year (28 February). The transition has implications for VAT registration and provisional tax — consult a registered tax practitioner before switching.
Disclaimer: This guide is for general informational purposes only and does not constitute professional tax advice. Tax laws change — always verify current rates and rules on sars.gov.za or consult a registered tax practitioner before making decisions. TaxPlanners is not a registered tax practitioner.

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