Demystifying Tax Brackets: How They Impact Your Income

In South Africa, the tax rate for small businesses varies depending on the type of entity and the income earned. Here’s an overview:

Small Business Corporations (SBCs) benefit from a more favorable tax regime.

For the 2023/2024 tax year, the tax rates are as follows:

Turnover Tax

Small businesses with a qualifying turnover of less than R1 million per year can opt for turnover tax, which is a simplified tax system with rates ranging from 0% to 7% depending on the turnover amount.

Key Considerations

SBC Qualification: To qualify as an SBC, a company must meet specific criteria, such as having all shareholders as individuals and the business's gross income not exceeding R20 million for the year.

Turnover Tax: This is designed for micro-businesses and covers income tax, VAT, and dividends tax in one tax, simplifying the tax process.

To summarise?

Small businesses in South Africa may pay different rates depending on their structure and income levels, with favourable rates available to SBCs and micro-businesses under turnover tax.

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