Small Business Corporations: What Are the Tax Benefits and Who Qualifies?
Running a small business in South Africa? You might qualify for major tax relief through the Small Business Corporation (SBC) regime. Here’s what you need to know.
What is a Small Business Corporation?
A Small Business Corporation (SBC) is a legal tax classification designed to support smaller companies with reduced corporate tax rates.
Tax Benefits
- Lower tax brackets than normal companies
- First R95,750 of taxable income is taxed at 0% (2024/2025)
- Tiered tax rates up to R550,000 before the standard 27% corporate tax kicks in
- Accelerated wear and tear on assets (100% in the year of purchase for assets under R7,000)
Who Qualifies?
To be considered an SBC:
- Turnover must be less than R20 million per year
- All shareholders must be natural persons (not other companies)
- The company must not earn more than 20% of income from investment or personal services (unless it employs 3+ staff)
Be Aware
- Professional service companies (law, accounting, etc.) need to be careful with the 20% rule
- If you don’t meet the criteria, SARS will automatically disqualify your SBC rates
Need help?
Our team of Chartered Accountants can review your structure and ensure you’re taking full advantage of available tax benefits.
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