Tax and SARS knowledge base
What are the 2026 turnover tax thresholds and rates?
What turnover tax thresholds and rates apply to South African micro businesses in 2026/27?
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Direct answer
The turnover tax qualifying ceiling increased to R2.3 million and the tax-free band increased to R600,000 for the 2026 changes. SARS publishes the following bands for years of assessment ending between 1 March 2026 and 28 February 2027:
- R0 to R600,000: 0%.
- R600,001 to R950,000: 1% of taxable turnover above R600,000.
- R950,001 to R1.4 million: R3,500 plus 2% of the amount above R950,000.
- R1,400,001 to R2.3 million: R12,500 plus 3% of the amount above R1.4 million.
The higher limit does not make every small business eligible. The entity and activity restrictions still apply.
What this means in practice
Turnover tax is calculated on qualifying turnover, not accounting profit. A low-margin business should compare the result with ordinary income tax rather than assuming a lower percentage must be cheaper.
Potentially qualifying entities include sole proprietors, partnerships, close corporations, companies and co-operatives. Personal-service providers, labour brokers and some businesses with disqualifying receipts or ownership features may not qualify. A partner involved in more than one partnership also needs careful review.
A turnover-tax business can elect to remain VAT registered. Turnover tax and VAT therefore require separate threshold and cash-flow decisions, even though both compulsory ceilings changed in 2026.
Step-by-step
- Forecast gross receipts for the full year and identify excluded or capital amounts.
- Confirm that expected qualifying turnover does not exceed R2.3 million.
- Apply the micro-business qualification test to the entity, owners, partners and activities.
- Calculate turnover tax using the correct band, not the rate on the full amount.
- Estimate ordinary income tax using expected profit and available deductions.
- Compare both results, including administration and cash-flow effects.
- Consider VAT registration separately.
- Apply within the permitted registration period using the current SARS process.
- Maintain records needed for the TT03 return and TT02 payments.
Documents and records to keep
- Monthly sales and bank reconciliation.
- Forecast and actual qualifying-turnover calculation.
- Micro-business qualification checklist.
- Ownership and partnership information.
- Comparison with ordinary income tax.
- Turnover-tax registration confirmation.
- TT02 payment advice and TT03 return records.
Important limits and exceptions
The R2.3 million amount is a qualification ceiling, not a tax-free amount. Only the first R600,000 falls in the zero-rate band. Tax applies progressively above it.
If turnover grows beyond the ceiling or another qualification condition fails, the business may need to exit the regime and move to ordinary income tax. Do not wait until the annual return to assess a known change.
SARS pages use specific effective-date wording for individuals and entities with different year ends. Confirm the period that applies to the taxpayer rather than applying the new bands to an earlier year.
When to get tailored advice
Get advice before electing turnover tax where margins are low, the business earns investment or professional-service income, has company shareholders, participates in partnerships, sells capital assets or is close to the ceiling.