What Is Turnover Tax? 2026 Rates, Who Qualifies, and How to Register

Turnover tax in South Africa is a simplified levy that the South African Revenue Service (SARS) charges on a small business’s gross receipts instead of on its profit. From 1 April 2026, a business earning up to R2.3 million a year can use it, up from the previous R1 million ceiling.¹ Registered micro businesses pay this one tax in place of income tax, VAT, provisional tax, capital gains tax, and dividends tax.²

How the System Works

Turnover tax sits in the Sixth Schedule of the Income Tax Act, No. 58 of 1962, separate from the rules that apply to ordinary taxpayers.³ You do not deduct expenses. You do not track depreciation, input VAT, or capital gains. A sliding rate is applied to your taxable turnover, and that is the tax.

Because the levy folds five separate taxes into one, the administrative load shrinks accordingly. Your year with SARS becomes two interim payments and one annual return, rather than provisional tax estimates, VAT returns every second month, and a separate income tax filing.

2026 Rates

The 2026 Budget widened the brackets and more than doubled the zero-rate band from R335,000 to R600,000.¹ For years of assessment beginning on or after 1 March 2026 (individuals) or 1 April 2026 (companies), the rates are:⁴

R1 to R600,000: 0% of taxable turnover
R600,001 to R950,000: 1% of the amount above R600,000
R950,001 to R1,400,000: R3,500 plus 2% of the amount above R950,000
R1,400,001 and above: R12,500 plus 3% of the amount above R1,400,000

A business turning over R800,000 pays R2,000 for the year: 1% on the R200,000 that sits above the threshold. The same business under the standard regime would deal with deductible expense calculations, provisional tax estimates, and possibly VAT returns as well.

Who Qualifies

Qualifying turnover must sit at or below R2.3 million per year of assessment.¹ The system is open to sole proprietors, partnerships, close corporations, co-operatives, and companies whose shareholders are all natural persons throughout the year.² The business must be genuinely owned by real people, not held inside a larger group structure.

A second ceiling applies to asset sales. If receipts from disposing of business property (immovable property and other assets used mainly for business, excluding financial instruments) exceed R1.5 million over the current year plus the two preceding assessment years, eligibility falls away.⁵

Someone who already holds shares in other private companies, or who runs several business interests, may also be disqualified. The point of that rule is to stop larger operations from splitting themselves up to slip under the threshold.

Who the System Excludes

Professional service businesses are shut out. SARS lists the excluded fields as accounting, actuarial science, architecture, auctioneering, auditing, broadcasting, consulting, draftsmanship, education, engineering, financial service broking, health, information technology, journalism, law, management, real estate broking, research, sport, surveying, translation, valuation, and veterinary science.⁵ That catches most freelancers and consultants who might otherwise look like a natural fit.

There is a tolerance. A natural person can still qualify if no more than 20% of total receipts come from professional services. For a company, the 20% cap covers professional service income and investment income combined.⁵ A shopkeeper who does occasional consulting on the side can still fit. A dedicated IT consultancy cannot.

How to Register

Registration runs through the TT01 form, available online or on paper. Before the form opens fully, a built-in qualification test screens you against the eligibility rules.⁶ Submission goes through the SARS Online Query System (SOQS).

An existing business needs to file the TT01 before the start of the new tax year on 1 March. A new business that begins trading during the year has two months from its start date to apply.⁶ SARS confirms receipt by SMS or email with a case number.⁷

Payment and Filing Dates

Turnover tax splits into two interim payments plus a final settlement after the annual return is assessed.²

First interim payment: last business day of August, using form TT02.
Second interim payment: last business day of February.
Annual return (TT03): filed during the annual filing season, generally 1 July to 31 January of the following year.

The final amount owed rests on 35% of the total taxable turnover for the year and becomes payable once the TT03 is submitted and assessed.⁸ Both the TT02 and the TT03 can be submitted through eFiling.²

Missing a filing deadline triggers monthly administrative penalties under the Tax Administration Act, set on a sliding scale from R250 to R16,000 depending on taxable income, and the penalty repeats each month a return stays outstanding.⁹ Unpaid tax also carries interest, set at 10.25% per annum from 1 March 2026.⁴

The VAT Choice

Turnover tax normally replaces VAT, so a registered micro business does not charge or collect it. Since 1 March 2012, though, a micro business has been able to elect to stay registered for VAT while on the turnover tax system.² Keeping VAT registration can matter if your customers are VAT-registered businesses that want to claim input tax on what they buy. It also lets you continue claiming input tax on your own purchases. If you drop VAT, both those doors close, so the right call depends on who buys from you and how much you spend on taxable supplies.

Leaving the System

A registered business can request deregistration at any time by writing to SARS, and the exit takes effect from the start of that assessment year.³ Think hard before doing it: SARS does not allow re-registration for turnover tax once you have deregistered.¹⁰

Deregistration also happens automatically when you outgrow the rules. If your qualifying turnover crosses the threshold, you have 21 business days from the disqualifying event to notify SARS.⁷ SARS then deregisters you from the start of the month after the event. Your assessment for that split year covers turnover tax for the period you qualified and normal income tax for the rest.¹¹ That transition is the point at which most business owners benefit from professional tax advice.

1
South African Revenue Service. Small Businesses – Taxpayers
2
South African Revenue Service. Turnover Tax
3
SARS. TT-GEN-01-G01 – Administration of Turnover Tax – External Guide
4
National Treasury / SARS. Budget 2026 Tax Guide
5
South African Revenue Service. Frequently Asked Questions Turnover Tax
6
South African Revenue Service. How to Register
7
South African Revenue Service. Guide to Administration of Turnover Tax
8
South African Revenue Service. How to Submit
9
South African Revenue Service. Admin Penalty
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South African Revenue Service. FAQ: May a Person Who Has Been De-Registered Again Register for Turnover Tax
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South African Revenue Service. FAQs on Turnover Tax