What is Company Tax Rate in South Africa?
If you make money in any way other than wage, in South Africa, you are a business. The private business qualifies to pay taxes. The self-employed are now considered to be enterprises as well, though. Even if you don’t register your business, this is still the situation. Simply by carrying out your self-employed activity, you are a business in the eyes of the law. However, a few restrictions will let certain enterprises pay a lower tax rate.
What is a Company tax?
Corporate tax, sometimes referred to as corporation tax or company tax, is a direct tax levied on the profits or assets of corporations or like-minded legal entities. These taxes are common in many nations, and they might also be levied at the state or local levels.
What is South Africa’s corporate income tax rate?
The usual corporate tax rate in South Africa is 28%. This implies that a firm must pay a tax equal to 28% of whatever profits it makes. The tax rate is added on top of any additional taxes you may owe. That much in taxes is a lot of money! The good news is that the rate on taxable turnover will decrease to 27% starting with tax years beginning in April 2022. Even if there hasn’t been much of a decline, any savings are welcome.
South Africa’s system of business taxes
The current flat rate of 28% income tax for firms registered in South Africa is levied by the South African Revenue Service. Although there are various tax rates for smaller or other types of businesses, Revenue Services (SARS). The tax rate will be 27% for tax years that expire on or after March 31, 2023.
In South Africa, who pays business taxes?
All registered enterprises in South Africa must pay corporate, business, or company tax to the South African Revenue Service (SARS for short). Businesses with a South African basis are typically required to pay South African corporate tax on their global revenue.
South Africa’s rates for corporate taxes
For all businesses, South Africa’s corporate tax rate is a flat 28% (27% for fiscal years ending on or after March 31, 2023). This is a little lower than Africa’s typical corporate tax rate. The percentage for Africa as a whole is 27.97%, higher than the world average of 23.54%. But in South Africa, trusts (apart from special trusts) are subject to a separate tax rate of 45%.
Companies must also pay capital gains tax at a rate of 22.4%. The capital gains tax rate for trusts is 36%, but it is only 18% for special trusts and individuals.
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South Africa’s fiscal year for businesses
In South Africa, the tax year lasts from the first of March to the end of February of the following year. You must submit your annual tax return for businesses between July and November for the previous tax year. Additionally, you must file two provisional tax returns: one in the first half of the year and the other in the second before year’s end, which will include projections of income earned for the current tax year.
How to submit your South African corporation tax return
First, you must register your firm or yourself as a taxpayer in South Africa in order to pay business tax. Then, SARS evaluates your business tax return in a manner akin to how individuals are taxed on their income.
The ITR14 is the business tax return form used in South Africa. Your company income tax return can be submitted online or in person at a nearby SARS office.
When submitting the business tax return form, you must have your Standard Industrial Classification (SIC) code available.
