What is Turnover tax?
An optional simplified tax for micro businesses with qualifying annual turnover of R2.3 million or less, charged on turnover instead of profit.
Turnover tax replaces income tax, CGT, dividends tax and, if you choose, VAT for qualifying micro businesses. Sole proprietors, partnerships, close corporations, companies and co-operatives can qualify, but not businesses that earn more than 20% from professional services or investment income, personal service providers or labour brokers, or companies with any shareholder who is not a natural person.
Budget 2026 raised the qualifying turnover limit from R1 million to R2.3 million and the 0% band from R335,000 to R600,000. SARS states the new threshold applies from 1 April 2026; its SMME Connect newsletter words this as years of assessment beginning 1 March 2026 for individuals and 1 April 2026 for companies. SARS notes the change is subject to Parliament's legislative process.
Registration is optional. New businesses must apply within two months of starting to trade; existing businesses can register before the start of a new tax year. You make two interim payments (TT02) and file an annual return (TT03).
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Turnover tax registration