Turnover tax vs normal tax
From 1 April 2026 the simplified turnover tax covers businesses up to R2.3 million turnover, with the first R600 000 tax free. Whether it beats normal tax depends entirely on your profit margin. Compare both in seconds. No signup, nothing leaves this page.
How this works
Turnover tax is calculated on the 2026/27 table: 0% on the first R600 000 of turnover, 1% from R600 001 to R950 000, and 2% from R950 001 up to the R2.3 million qualifying threshold. It replaces income tax, provisional tax and most VAT and dividends tax admin for a qualifying micro business. The comparison uses the standard 27% company rate on your estimated profit; a small business corporation's stepped rates can make normal tax even cheaper at low profits, which strengthens the same conclusion the margin test gives you.
The rule of thumb the numbers produce: high margin businesses win on turnover tax because expenses are irrelevant to it; low margin businesses lose for the same reason. The break-even sits where your margin times 27% equals your effective turnover tax rate.
Frequently asked questions
What is turnover tax?
A simplified tax for micro businesses that replaces income tax, provisional tax and, in most cases, VAT and dividends tax on the first R200 000 of dividends. It is calculated on turnover, not profit, so record keeping is far lighter. From 1 April 2026 the qualifying threshold is R2.3 million.
What are the rates for 2026/27?
The first R600 000 of annual turnover is tax free, turnover from R600 001 to R950 000 is taxed at 1%, and turnover from R950 001 up to the R2.3 million threshold at 2%.
When is turnover tax a bad idea?
When your profit margin is thin. Turnover tax ignores expenses, so a business turning over R1 million with a 5% margin can pay more under turnover tax than a company paying 27% on its small profit. High margin service businesses usually benefit; low margin traders usually do not.
Who cannot register for turnover tax?
Personal service providers and professional services such as accounting, law, health and consulting are largely excluded, as are businesses earning more than 20% of income from investment income or from services rendered to connected persons. Check the SARS qualifying rules before registering.
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Set up SARS access →Staying on normal tax?
Check your provisional tax payments before the deadlines catch you.
Check provisional tax →Turnover tax table and R2.3 million threshold per the 2026 Budget, effective 1 April 2026. The comparison is simplified: it ignores small business corporation rates, dividends tax and assessed losses. Free tools are estimates, not tax advice.