Turnover Tax 2026: New R2.3 Million Limit and Rates
The turnover tax threshold in South Africa is now R2.3 million. Turnover tax is SARS's simplified tax system for micro businesses: the 2026 Budget raised its limit from R1 million to R2.3 million in business turnover, and the first R600,000 is now taxed at 0%. For many small businesses that makes it worth a fresh look.
What turnover tax is
Instead of paying income tax on your profit, you pay a small percentage of your business turnover. For a qualifying micro business it replaces:
income tax and provisional tax
capital gains tax on business assets
dividends tax
VAT, although you can choose to stay VAT registered if that suits your business (see the new VAT registration threshold)
It is optional. You choose whether to register for it.
The new turnover tax rates
SARS lists these limits and rates as effective from 1 April 2026:
Business turnover for the year | Turnover tax payable |
|---|---|
R0 to R600,000 | 0% |
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 to R2,300,000 | R12,500 plus 3% of the amount above R1,400,000 |
What that looks like in rand
Annual business turnover | Turnover tax for the year |
|---|---|
R500,000 | R0 |
R800,000 | R2,000 |
R1,200,000 | R8,500 |
R2,000,000 | R30,500 |
Who qualifies
Sole proprietors, partnerships, companies, close corporations and co-operatives can qualify if their qualifying business turnover for the year is R2.3 million or less.
You cannot use turnover tax if, for example:
more than 20% of your receipts come from professional services (such as consulting, legal, medical or accounting work)
you are a personal service provider or a labour broker
your company has a shareholder that is not a natural person
the business has been split up artificially to stay under the limit
you were on turnover tax before and left voluntarily
There are more detailed rules for companies and partnerships, so check your structure before you apply.
Is turnover tax right for your business?
It usually suits you when:
your business turnover is under R2.3 million and your profit margin is healthy, because you are taxed on turnover, not profit
you want less admin: fewer returns and simpler records
you sell mainly to consumers and do not need to be VAT registered
It may not suit you when:
your margins are thin or you are running at a loss, because you still pay turnover tax on sales, and you cannot deduct expenses
your customers are VAT-registered businesses and you want to stay in the VAT system anyway
your business turnover is likely to pass R2.3 million soon
The simplest way to decide is to compare what you would pay under turnover tax with what you would pay on your profit under the normal system. It only takes your latest numbers.
How to register and pay
Existing businesses register before the start of the tax year they want turnover tax to apply to. The tax year starts on 1 March.
New businesses have two months from the date they start trading to register.
You apply on form TT01. SARS also now offers turnover tax registration on its Online Query System.
You make two interim payments a year, by the last business day of August and of February, using form TT02.
You submit one annual return, the TT03.
You must keep records of all amounts received, dividends declared and a list of business assets that cost more than R10,000.
Frequently asked questions
What is the turnover Tax threshold in 2026?
R2.3 million in business turnover a year, up from R1 million. SARS lists it as effective from 1 April 2026.
Do I pay turnover tax on the first R600,000?
No. Business turnover up to R600,000 is taxed at 0%.
Can I be on turnover tax and VAT registered?
Yes. Turnover tax replaces VAT, but a micro business can choose to stay in the VAT system.
Can consultants and other professionals use turnover tax?
Not if more than 20% of their receipts come from professional services.
Related guides
Want to know which option costs you less?
Our SARS-registered team can compare turnover tax with the normal system using your actual numbers, and register you if it makes sense. If you would like your bookkeeping and tax handled every month, see our 1% package: 1% of your business turnover, from R79 a month excluding VAT. Or get in touch with a question.
Sources: SARS: Turnover Tax; SARS: Budget 2026 frequently asked questions.
This article is general information based on SARS guidance and the 2026 Budget, current at September 2026. It is not advice for your specific situation.
