SARS compliance: the complete tax guide for South African businesses

South African businesses answer to plenty of authorities, but only one of them can help itself to your bank account without first going to court, and that is SARS. The South African Revenue Service administers income tax, VAT, PAYE and a handful of smaller taxes under some of the most powerful collection machinery in the statute book — machinery that collected R2,010.3 billion in net revenue in the 2025/26 fiscal year. Announcing that milestone in April 2026, then-Commissioner Edward Kieswetter credited “the more than 14 500 employees who diligently perform millions of activities meticulously to achieve this record collection” — and a meaningful share of those millions of activities is enforcement pointed at businesses. Unlike a once-off registration, tax compliance is a cadence. Returns fall due every month, every second month, twice a year and once a year, each on its own clock, each with its own penalty for being late.

This guide maps the taxes a typical SA business actually deals with, in the order they tend to matter: what each one is, who has to register, when it’s due, and what it costs when you miss. It’s written for the owner, financial manager or bookkeeper who needs the whole picture on one page — not a deep dive on any single return, but a working map of the lot, current to the 2026 changes that moved several of the thresholds.

The taxes a South African business actually deals with

Most businesses meet SARS through four or five separate taxes, and the confusion is rarely about any single one — it’s about keeping all of them on the same calendar. A company pays income tax on its profits and files an ITR14 once a year; it pays that same tax in advance through provisional tax twice a year; if it has employees it withholds PAYE every month; and once it’s big enough it charges and remits VAT every second month. Each has a different form, a different due date, and a different part of SARS chasing it.

The figure above uses a February year-end. Shift your financial year and the anchors move with it, but the shape holds: a monthly obligation, a bi-monthly one, two or three provisional payments, and the annual return. The rest of this guide takes them one at a time.

Income tax and the ITR14

Every company registered in South Africa pays income tax on its taxable income at a flat rate of 27% (for years of assessment ending on or after 31 March 2023). There’s no sliding scale for an ordinary company — the first rand of taxable profit is taxed at the same rate as the millionth. The return that declares it is the ITR14, and it’s due 12 months after the end of your financial year. A company with a February year-end files by the following February; a June year-end, by the following June. That rolling deadline is exactly why company tax slips through the cracks — it isn’t tied to a national date everyone remembers.

Smaller companies get a genuine break. If yours qualifies as a Small Business Corporation (SBC) — broadly, all shareholders are natural persons, none of them holds shares in another company (with a few listed exceptions), gross income is no more than R20 million, it isn’t a personal-service provider, and no more than 20% of its receipts and capital gains come from investment income and personal services combined — you pay on a graduated scale instead of the flat 27%, with the first slice taxed at 0%:

Those are the SBC rates for years of assessment ending between April 2026 and March 2027; SARS updates the brackets most years, so check the current table when you file. (Like the other 2026 thresholds in this guide, they were announced in the February 2026 Budget and were not yet law when this guide was updated: see the note under VAT below.) For a genuinely small, profitable company the saving over the flat 27% is real — but the qualifying conditions are strict, and a single disqualifying shareholder or too much investment income drops you back to the standard rate.

Provisional tax: the one that catches people

Provisional tax isn’t a separate tax — it’s income tax paid in advance, in instalments, so you don’t face one enormous bill at assessment. Every company is automatically a provisional taxpayer. So is every individual earning meaningful income that isn’t salary with PAYE already deducted, which catches most business owners drawing dividends, rent, or director’s income. If your only income is a salary taxed through PAYE, you’re generally out.

There are two compulsory payments and one optional one, all worked off your estimate of the year’s taxable income:

• First payment — within six months of the start of your tax year, so the end of August for a February year-end.
• Second payment — by the last business day of your tax year, the end of February.
• Third payment (voluntary top-up) — the end of September for a February year-end (seven months after it; six months for a company with any other year-end), to settle any shortfall before interest builds up.

The trap is the estimate. SARS lets you base the first-period estimate on your basic amount — essentially the taxable income SARS last assessed, less any taxable capital gain, raised by 8% if you make the estimate more than 18 months after the end of that year. But the second payment is judged against reality. If your taxable income comes in under R1 million and your estimate was below 90% of the actual figure and below the basic amount, or it comes in over R1 million and your estimate was below 80% of actual, SARS levies an underestimation penalty of 20%. It is 20% of the gap between the tax on 90% of your actual taxable income (80% above R1 million) and the PAYE and provisional tax you had paid by year-end; below R1 million, SARS uses the tax on the basic amount instead if that is lower. Paying an instalment late draws a separate 10% penalty plus interest, and the underestimation penalty is reduced by any such late-payment penalty. Provisional tax punishes optimism.

VAT — and the R2.3 million question

Value-added tax is charged at 15%. Ignore anything you read about 15.5% or 16% — those increases were announced in the 2025 Budget and then reversed before they ever took effect, so the rate never actually moved. VAT is the tax businesses most often register for too early or too late, and the 2026 Budget changed the answer.

From 1 April 2026, you must register for VAT once your taxable turnover exceeds R2.3 million in any consecutive 12 months — up from R1 million, where it had sat for the better part of two decades. That’s a real reprieve for growing firms: many businesses that would have been dragged into VAT at R1 million now sit comfortably below the line. You may still register voluntarily once turnover passes R120,000 (raised from R50,000), which is worth doing mainly if your customers are themselves VAT-registered and you want to claim input VAT on your costs.

A note on these 2026 figures. The new VAT, turnover-tax and small-business thresholds were announced in the February 2026 Budget, and SARS has applied them since 1 April 2026. The law that enacts them had not yet been passed: SARS’s own Budget 2026 FAQ says “the amendments have not yet been promulgated”, and the 2026 Rates Bill was still before Parliament’s finance committee at the end of September 2026. Check that it has passed before relying on a figure in a dispute.

Once registered, you file a VAT201. Most businesses fall into Category A or B and file every second month; larger vendors (turnover above R30 million) file monthly. Per SARS’s own vendor obligations, the return and payment are due by the 25th of the month after the tax period, or by the last business day of that month if you submit the return on eFiling (you can still pay by EFT). The eFiling extension is free, so there’s no reason not to use it.

Refunds run on a clock too. Where a return shows VAT in your favour, SARS’s published commitment is to pay within 21 business days of receiving a correctly completed return — and the clock only starts once any supporting documents SARS asks for are in. It is not a small pipe: R371.1 billion in VAT refunds was paid out in 2025/26. A refund that ages past the 21 days without explanation is worth escalating, first through SARS’s complaints process and then to the Tax Ombud.

PAYE: employees’ tax, every month

The moment you have employees, you withhold employees’ tax (PAYE) from their pay and remit it to SARS, usually with the Unemployment Insurance Fund (UIF) contributions alongside it. The Skills Development Levy (SDL) joins them once your annual payroll passes R500,000. An employer who isn’t registered with SARS for PAYE or SDL pays UIF to the UI Commissioner instead. For everyone else this is the most relentless SARS obligation: the EMP201 declaration and payment are due by the 7th of every month (or the last business day before, if the 7th is a weekend or public holiday). Miss it and penalties and interest attach immediately — you’re remitting money you already deducted from someone else, so SARS is unforgiving about it.

Twice a year you also reconcile, via the EMP501 employer reconciliation, which squares what you declared and paid against your employees’ tax certificates (IRP5s). There’s an interim reconciliation (for 2026, 21 September to 31 October) and an annual one from 1 April to 31 May. Get it wrong and your employees can’t file their own returns cleanly, so it isn’t a formality — and file it late and SARS levies a penalty of 1% of your annual PAYE liability, climbing 1% for each month outstanding to a maximum of 10%. The interim EMP501 guide walks through what has to match before you submit.

One payroll-linked obligation that doesn’t go to SARS at all is COIDA — workplace-injury cover run by the Compensation Fund — which most employers only remember when a tender asks for a Letter of Good Standing.

Turnover tax: the micro-business shortcut

For the smallest businesses, SARS offers an escape hatch. Turnover tax is a single elective tax that replaces income tax, VAT, provisional tax, capital gains tax and dividends tax with one calculation based on turnover rather than profit. From 1 April 2026 you qualify if your annual turnover is R2.3 million or less (up from R1 million), and the first R600,000 of turnover is tax-free (up from R335,000). Above that the rate climbs gently — 1%, then 2%, then 3% — on a small sliding scale.

It’s genuinely simpler, but it isn’t always cheaper: because it taxes turnover rather than profit, a low-margin business can pay more under turnover tax than it would on its actual profit. It also excludes most professional- and personal-service businesses. Worth modelling carefully before you elect it: you can leave at the end of any tax year, but a business that leaves can never register for turnover tax again.

The returns and their deadlines

Every SARS return a typical business files, on one page. Dates shift for weekends and public holidays, and the annual ones move with your own financial year-end:

What it costs to miss a deadline

SARS penalties aren’t a slap on the wrist, and they compound. Three regimes do most of the damage:

• Administrative penalties for outstanding returns — a fixed monthly amount based on taxable income, from R250 up to R16,000, recurring every month the return stays outstanding, for up to 35 months (longer if SARS doesn’t have your registered address). SARS currently charges it for outstanding income-tax returns, and a company is charged only after SARS has sent a final demand and the return is still missing 21 business days later. A late VAT201 draws no penalty for filing late, only the 10% for paying late. One forgotten income-tax return can quietly rack up tens of thousands of rand.
• The provisional-tax underestimation penalty — 20% of the shortfall if your second estimate came in too low, as above.
• Late-payment penalties and interest — typically a 10% penalty on the amount paid late, plus interest at SARS’s prescribed rate (10.5% a year from 1 September 2026). Interest runs from the due date until you pay, so a small liability left alone only grows.

None of these require SARS to take you to court. They’re raised administratively, and the onus is on you to notice and dispute them — which is far harder than never triggering them. The penalties guide covers how to find them and when to ask for remission.

After you file: verification, refunds and your tax compliance status

Filing isn’t always the end of a return. SARS can select any return for verification, which means checking your figures against third-party data and your own records. It tells you by letter, and the letter sets the due date and lists the documents it wants; on eFiling you can upload up to 20 documents of 5 MB each. SARS says it aims to finish within 21 business days of your upload, and a refund on that return is paid only once verification is done. The verification guide covers what the letter asks for and what to send.

Your filing record also drives your Tax Compliance Status. Instead of the old paper tax clearance certificate, SARS gives you a PIN that lets a buyer, a bank or a government department see your status on eFiling as it stands on the day they look. To read as compliant you need no outstanding returns, no debt to SARS without an agreed payment arrangement, and registration for every tax you’re liable for. One late return can turn the status red for everyone holding your PIN. The tender documents guide covers how a buyer checks the PIN and the other proofs a tender asks for, and the tax compliance status guide how to fix a red status.

Where SA businesses actually get caught out

The misses are rarely exotic. They’re the same handful, repeated across almost every business that hasn’t put a system around them:

• A provisional taxpayer who forgets the August first payment entirely, because nothing external reminds them.
• A company that crosses the VAT threshold mid-year and registers months late, owing output VAT it never charged its customers.
• An EMP201 paid a few days late most months, because the 7th isn’t in anyone’s calendar.
• An ITR14 that slips because “12 months after year-end” isn’t a fixed national date.
• A second provisional estimate lowballed to ease cash flow, triggering the 20% penalty at assessment.
• Old admin penalties silently recurring on a return nobody realised was still outstanding.

Every one of these is a calendar problem before it’s a tax problem. We built a free tool for exactly this — the SARS & compliance deadline calendar generates your dates from your year-end and lets you export them straight into your own calendar, so the 7th and the end of August stop being surprises.

Inside Komply, the SARS dossier lists each return you add with its statutory due date and shows the penalty and interest a late VAT201, EMP201 or provisional payment is running up, on every plan. On Pro and Enterprise it also scores each VAT201, EMP201 and EMP501 before you file, tests the certificates in an EMP501 export, tracks VAT refunds against SARS’s 21-business-day window and counts down to a verification’s due date. It files nothing and has no link to your SARS account: you or your accountant still submit on eFiling.

SARS is one of four regulatory regimes, not the only one

SARS is the tax corner of a bigger compliance picture. The same business usually also carries POPIA data-protection duties, B-BBEE scorecard obligations for procurement access, and — if it operates in financial services — FSCA conduct requirements. Four regulators, four rulebooks, four calendars, none of which talk to each other. We’ve mapped how they fit together, and where they intersect, in POPIA vs B-BBEE vs SARS vs FSCA: the South African compliance stack explained. If B-BBEE is on your radar too, B-BBEE levels explained is the companion piece, and the complete POPIA guide covers the data-protection side.

Frequently asked questions

Do I have to register for VAT?

Only once your taxable turnover exceeds R2.3 million in any consecutive 12-month period (from 1 April 2026 — it was R1 million before). Below that you can register voluntarily from R120,000 of turnover, which is mainly worth doing if your customers are VAT-registered and you want to reclaim input VAT on your costs.

What is provisional tax, and do I have to pay it?

It’s income tax paid in advance, in instalments. Every company pays it, and so does any individual with significant income that isn’t already taxed through PAYE — which is most business owners. If your only income is a PAYE salary, you generally don’t.

When is my company’s tax return due?

The ITR14 is due 12 months after your financial year-end — the following February for a February year-end, and so on. It’s a rolling deadline tied to your own cycle, not a fixed national date, which is exactly why it’s easy to miss.

What happens if I miss a SARS deadline?

It depends which one. An outstanding income-tax return draws a fixed penalty of R250 to R16,000 a month while it stays outstanding (for a company, once a final demand has gone unanswered for 21 business days). Paying VAT or provisional tax late draws a 10% penalty plus interest from the due date, late PAYE draws a penalty and interest of its own, and a late EMP501 draws 1% of the year’s PAYE for each month it is late, up to 10%. Penalties are raised administratively — SARS doesn’t need a court — and the onus is on you to dispute them.

Is turnover tax worth it?

Sometimes. It replaces income tax, VAT and provisional tax with one turnover-based calculation for businesses under R2.3 million, and the first R600,000 is tax-free. But because it taxes turnover rather than profit, a low-margin business can end up paying more than it would on its actual profit. Model it before electing.