What this page covers
A company pays a flat rate on taxable income, but two concessionary regimes exist for small businesses, and which one applies changes the effective rate substantially.
| Entity | Rate | Note |
|---|---|---|
| Company | 27% | Flat, on taxable income |
| Small business corporation | 0% to 27% | Sliding scale, conditions apply |
| Micro business, turnover tax | 0% to 3% | On turnover, not profit |
| Trust | 45% | Flat, unless income is distributed |
| Personal service provider | 27% | Company rate, limited deductions |
| Dividends paid out | 20% | Withheld from the shareholder |
| Taxable income | Rate |
|---|---|
| R0 to R95,750 | 0% |
| R95,751 to R365,000 | 7% of the amount above R95,750 |
| R365,001 to R550,000 | R18,848 plus 21% above R365,000 |
| Above R550,000 | R57,698 plus 27% above R550,000 |
| Profit | Company at 27% | Then dividends tax at 20% | Total | Effective rate |
|---|---|---|---|---|
| R200,000 | R54,000 | R29,200 | R83,200 | 41.6% |
| R500,000 | R135,000 | R73,000 | R208,000 | 41.6% |
| R1,000,000 | R270,000 | R146,000 | R416,000 | 41.6% |
| R2,000,000 | R540,000 | R292,000 | R832,000 | 41.6% |
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⬇ Download CSVHow these figures work
The figures on this page come from the body that publishes them and change on a schedule rather than continuously, which is what makes them worth keeping in one place. The combined 41.6% is what a company structure costs once profit is taken out as a dividend. Below about R1.8 million of income, trading personally at your marginal rate is usually cheaper.
A small business corporation must meet several conditions at once, including that no shareholder holds an interest in another company and that no more than 20% of income is investment income. A pure trading company often fails that second test.
★ What this means in practice
Money left in the company is taxed once at 27%. The second layer only applies when it comes out.
✕ Common mistakes
- The combined 41. The combined 41.6% is what a company structure costs once profit is taken out as a dividend. Below about R1.8 million of income, trading personally at your marginal rate is usually cheaper.
- A small business corporation must meet several conditions at once, inclu. A small business corporation must meet several conditions at once, including that no shareholder holds an interest in another company and that no more than 20% of income is investment income. A pure trading company often fails that second test.
- Money left in the company is taxed once at 27%. Money left in the company is taxed once at 27%. The second layer only applies when it comes out.
- Taking a figure without its date. A number from a reference page is only as good as when it was last checked, which is why the date sits at the top of this one.
Notes on reading these figures
- The combined 41.6% is what a company structure costs once profit is taken out as a dividend. Below about R1.8 million of income, trading personally at your marginal rate is usually cheaper.
- A small business corporation must meet several conditions at once, including that no shareholder holds an interest in another company and that no more than 20% of income is investment income. A pure trading company often fails that second test.
- Money left in the company is taxed once at 27%. The second layer only applies when it comes out.
Where the company route is the wrong answer, the VAT Rates and Registration Thresholds page covers the other threshold a growing trading business crosses.
To put these figures to work, The Should I trade through a company? runs the arithmetic on your own numbers; Should I trade through a company? covers the same ground in ordinary language; Dividend Withholding Tax goes into the detail this table only summarises; and Trust Taxation Reference is the related figure worth reading beside it.
Where the numbers here point to a different structure, PAYE, UIF and SDL Reference covers what a company with employees adds on top.
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Terms used on this page
Frequently asked questions
Is a company cheaper than trading personally?
Only above roughly R1.8 million of profit. Below that, the combined 41.6% of company tax plus dividends tax usually exceeds your personal marginal rate.
What is the small business corporation rate?
A sliding scale from 0% to 27%, but the conditions are strict and a pure trading company usually fails the 20% investment income test.
Can I leave profit in the company?
Yes, and then only 27% applies. The second layer of 20% dividends tax arises when you take it out.
What is turnover tax?
A simplified regime taxing turnover rather than profit, at 0% to 3%, for micro businesses below R1 million of turnover.
Did the company rate change in 2026?
No. It remains 27%, as announced in Budget 2026.
What is a personal service provider?
A company whose income is essentially your own personal services. It is taxed at the company rate with most deductions denied.