Turnover tax for micro businesses from April 2026
South Africa's turnover tax after the April 2026 change: who may use it, the taxes it replaces, the 2027 rates and finding turnover in your books.
By Achekam · · 4 min read · For Running a business businesses in South Africa
For a very small South African business, tax administration can cost more in time than the tax itself. Income tax, provisional tax, VAT and the rest each come with their own returns, deadlines and calculations, and each needs books kept to a standard that suits the tax rather than the business.
Turnover tax is SARS's simpler alternative for micro businesses. Instead of working out taxable profit, you pay a small percentage of turnover, and several other taxes fall away. From 1 April 2026 the door to it opened wider. This article explains the new thresholds, what the regime replaces, which kinds of business may use it, the rate table for the 2027 year, and how to see your turnover in your own books before you decide.
The new thresholds
SARS says that, following the 2026 Budget Speech, the turnover tax threshold increased to R2.3 million and the tax-free threshold to R600 000, with effect from 1 April 2026.
Two numbers, two jobs:
- R2.3 million is the ceiling for qualifying annual turnover. Above it, a business cannot use turnover tax.
- R600 000 is the level up to which turnover is taxed at 0% under the regime.
A business that looked at turnover tax a few years ago and was too large for it may now fit. One whose turnover sits near the new ceiling should look at the trend, not just last year's figure, because outgrowing the regime brings the ordinary taxes back.
These are the thresholds SARS published at the time of writing; its turnover tax page explains who qualifies, how the tax is worked out and how registration, payments and returns work.
The taxes it replaces
According to SARS, turnover tax replaces income tax, VAT, provisional tax, capital gains tax and dividends tax for micro businesses with qualifying annual turnover of R2.3 million or less.
That is a long list. In place of five taxes, each with its own calculation, the business deals with one tax worked out on turnover.
VAT is the exception that needs thought. SARS adds that a registered micro business may elect to remain in the VAT system. Some businesses want to, because their customers are VAT vendors who expect a tax invoice. That choice, and the VAT period that goes with it, is covered in staying VAT-registered on turnover tax. SARS's tax period rules note that Category D, with six-monthly returns ending February and August, applies mainly to farmers below a set level of supplies and to micro businesses registered in terms of the Sixth Schedule to the Income Tax Act.
Which business forms may qualify
SARS says sole proprietors, partnerships, close corporations, companies and co-operatives may qualify. So the regime is not limited to one-person businesses, and a small company can use it as well as a sole trader.
"May qualify" is the important phrase. Being one of those forms, with turnover under the ceiling, is where the test starts. Read SARS's page in full for anything else that could rule your business out before registering, or ask your accountant to check it against your business.
The rate table for the 2027 year
SARS says that for years of assessment ending between 1 March 2026 and 28 February 2027, turnover tax is worked out on taxable turnover like this:
| Taxable turnover | Turnover tax |
|---|---|
| Up to R600 000 | 0% |
| Above R600 000, up to R950 000 | 1% of the amount above R600 000 |
| Above R950 000, up to R1 400 000 | R3 500 plus 2% of the amount above R950 000 |
| Above R1 400 000 | R12 500 plus 3% of the amount above R1 400 000 |
The fixed amounts are the tax on everything below each band, so only the slice of turnover inside a band is charged at that band's rate. A business with turnover just above R950 000, for example, pays R3 500 plus 2% of the small amount over R950 000.
Compare that with the small business corporation bands, which tax profit rather than turnover, in small business corporation tax rates for 2027. Which suits you depends on your margins: turnover tax is charged on turnover, not profit, so a business with thin margins should compare the two carefully.
Seeing turnover from your own books
Before deciding, you need a reliable turnover figure for a full year, and ideally a sense of where it is heading.
In Achekam, management accounts show an income statement for a chosen period beside the period before, and a balance sheet at period end, both added up from your own journals and exportable as PDF or CSV. The comparison with the period before shows the trend at a glance. The year-to-date preset starts on 1 January, not on your own year start, so choose your own dates to match your year of assessment.
If the business leaves VAT, its invoices should stop charging it. In Achekam, a South African business sets each invoice line's VAT to 15% or 0%. The invoice screen does not tell zero-rated and exempt apart, so a 0% line simply shows that no VAT was charged; it records nothing about why.
Once registered, turnover tax has its own payments and annual return. How those work is in turnover tax payments and the TT03 return.
Deciding whether it fits
Pull a full year's income statement, compare turnover with R2.3 million and look at the trend. Work out the turnover tax from the table, then ask your accountant what the business would pay under the ordinary rules. If turnover tax is cheaper or close to it, the time saved on administration may settle the question.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
