SBC Tax Rate

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Small Business Corporations (SBCs)

Qualifying Small Business Corporations (SBCs) under Section 12E of the Income Tax Act benefit from a progressive tax scale, starting as low as \(0\%\) for the first \(R99,000\) in taxable income. This offers a significantly lower alternative to the flat \(28\%\) standard corporate income tax rate. 

Current SBC Tax Rates

The exact tax amount depends on your company’s taxable income for the year: 

Taxable Income  Rate of Tax
\(R1\) to \(R99,000\) \(0\%\) of taxable income
\(R99,001\) to \(R365,000\) \(7\%\) of taxable income above \(R99,000\)
\(R365,001\) to \(R550,000\) \(R18,620\) + \(21\%\) of taxable income above \(R365,000\)
\(R550,001\) and above \(R57,470\) + \(27\%\) of taxable income above \(R550,000\)

Who Qualifies?

To be taxed at these reduced marginal brackets, your business must meet specific strict criteria: [1, 2]
  • Shareholders: All shareholders/members must be natural persons (individuals) throughout the entire tax year.
  • No Outside Shareholding: Shareholders cannot hold shares or interest in any other private company, close corporation, or co-operative.
  • Gross Income: The company’s annual gross income must not exceed $R20 million.
  • Passive/Personal Service Limitations: No more than \(20\%\) of total gross income and capital gains combined may come from investment income or personal services (unless three or more full-time unconnected employees are employed). [1, 2, 3, 4, 5]

Aside from the lower progressive rates, qualifying SBCs can also claim accelerated depreciation (wear-and-tear) on capital assets, offering massive tax-saving benefits upfront. [1, 2]
To confirm your brackets and potential liabilities, you can use the TaxTim Small Business Income Tax Calculator or read the full details on the SARS Small Businesses Page. [1]