3 Facts to know about the company tax rate in South Africa

3 Facts to know about the company tax rate in South Africa

A short guide on South Africa’s business tax

They say that the only guarantee about life is death, but the truth is that taxes are as absolute as their morbid counterpart. This poses a serious challenge for small business owners who are clueless about how company income tax works, a challenge we’d like to help you solve.

In South Africa, the company tax rate is a flat 28%, meaning that 28% of your business’ revenue needs to go towards income tax. There are however exceptions, we’ll get into those a little later.

This blog will take a closer look into what business tax is, why the company tax rate is what it is and how businesses can pay their income taxes on time.

All about the South African company tax rate

The South African company tax rate is a flat 28% for all businesses in the country, but can also be negotiated with SARS and the government depending on the size of your business as well as any applicable tax deductions that may apply to you.

In a nutshell, business tax is imposed on businesses incorporated under the laws of South Africa in which the government uses the tax as its source of income. Generally, companies get taxed more than individuals because they bring in larger sums of revenue – the bigger the business, the more tax it pays (unless of course it finds a clever way to use tax deductions to its advantage).

Company income tax is for businesses of all types and sizes in South Africa. From listed companies, small businesses, private enterprises and public benefit companies, corporate tax doesn’t discriminate. The only catch is that a business can only pay tax once it begins earning R79 000 or above per annum; even if you are not earning that much yet, it’s still wise to pay attention to your future tax obligations.

Why do companies need to pay corporate tax?

Businesses play a crucial role in keeping the economies of the countries they operate in working as they should. Besides being providers of goods and services, businesses also need to contribute financially to a country’s wellbeing; this is important because the more robust a country is, the more opportunities a business will have to thrive in that country.

This is all because of how the economic machine works, and business income tax plays a large role in this never-ending process. If you’d like a simplified version of why your business needs to pay income tax, here goes: businesses are legally bound to pay taxes when they start earning a revenue equal to or above the South African corporate tax threshold (R79 000). If you don’t pay your taxes, you’ll get into legal trouble.

How can you pay your business income tax?

Applying to pay taxes, as well as keeping up with your taxes, can be one of the most tedious things any businesses owner undertakes (unless of course you’re a tax geek like us!). There are a few things you’ll need to do to achieve a good tax status for your business, visit the SARS website for more details.

Otherwise, let us do all that tedious work for you! Check out our offerings and give us a call if you think we can help you.