Small business corporation tax rates for 2026/27

The bands, as SARS published them

These are the rates in the SARS Budget 2026 FAQ for qualifying small business corporations, for years of assessment ending from 1 April 2026 to 31 March 2027:

• R0 to R99 000 of taxable income: 0%
• R99 001 to R365 000: 7% of the amount above R99 000
• R365 001 to R550 000: R18 620 plus 21% of the amount above R365 000
• Above R550 000: R57 470 plus 27% of the amount above R550 000

“Small” is not the application form

A company qualifies only if it meets the tests in the Income Tax Act for that year. In plain language, SARS looks at the gross income of the company, at who the shareholders are (they generally need to be natural persons, in limited numbers), and at whether the company is earning personal-service income in a way that disqualifies it. Investment income can also taint the status. There is a gross-income ceiling. We check the section against your shareholders and your income before anyone puts the 0% band on a provisional tax calculation.

A close corporation, a company and a personal-service provider are not interchangeable labels. If you have been “claiming SBC for years” and the shareholding changed when a child or a trust entered, the test has to be done again.

How this meets provisional tax and salary

The band applies to taxable income after deductible expenses, including a market-related salary to the people who work. Paying the owner nothing, and leaving all the profit in a company that might not qualify, is not a strategy. Paying an inflated salary to manufacture a lower company profit can fail the “in production of income” test and annoy the person who then owes tax on the salary.

We look at the pair: company taxable income, and the owner’s own return. The SBC band is one input. It is not the whole plan. And we still do not let the tax tail wag the business. A structure you cannot explain at the dinner table will not survive a verification.

Turnover tax is a different system

Turnover tax is elective and has its own ceiling. Budget 2026 increased the turnover-tax qualifying turnover to R2.3 million. It is not “SBC lite”, and it does not combine casually with every other registration. If someone offers it as a default for any business under R2.3 million, ask them to write down what you give up. We will do that comparison on request. We will not switch a trading company onto it because the ceiling now sounds familiar from the VAT announcement.