South Africa Corporate Tax - Guide for International Expansion

Are you planning to do business in South Africa? Then it's essential to understand how corporate income tax works and what it means for your company.

In this guide, we'll break down everything you need to know about corporate taxes in South Africa, from current rates to payment procedures and compliance requirements. Whether you're launching a new venture or expanding your existing business, understanding your tax obligations is key to running a successful operation in this dynamic African market.

If you're looking for smart ways to manage international payments and simplify your financial operations, we'll also show you how Wise Business can help streamline cross-border transactions and keep your finances running smoothly in South African rand.

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This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Wise Payments Limited, its subsidiaries or affiliates, and it is not intended as a substitute for obtaining business advice from a tax advisor or any other professional.

South Africa corporate tax rate in 2025

The standard corporate income tax rate in South Africa is a flat 27% for tax years ending on or after March 31, 2023. For qualifying Small Business Corporations (SBCs), there is a tiered tax structure that begins at 0% for taxable income up to R95,750 and increases in increments, with the highest rate being 27% on income over R550,000.¹

South Africa operates a residence-based tax system, meaning resident companies are taxed on their worldwide income, while non-resident companies are only taxed on income sourced within South Africa. A company is considered a South African tax resident if it is incorporated in South Africa or has its place of effective management in the country.¹

The country also offers various tax incentives for specific sectors and activities. These include reduced rates for small business corporations, manufacturing incentives, and special economic zone benefits.^{2 4} Additionally, South Africa has an extensive network of double taxation agreements with over 80 countries to prevent double taxation of income.³

For mining companies, there are additional considerations including the Mining Royalty Tax, which is levied separately from corporate income tax.⁵ The corporate tax system also includes provisions for capital gains tax, which is included in the corporate income tax calculation at an effective rate of 21.6% for companies.^{6 7}

Read more about the corporate tax in United States

How to pay corporate tax in South Africa

Companies in South Africa must register for corporate income tax with the South African Revenue Service (SARS) and use their online platform, eFiling, to submit returns and make payments.⁸ All registered companies are required to file annual income tax returns, typically due within 12 months after the end of their financial year.⁹

Corporate taxes in South Africa are paid in South African rand (ZAR). Companies with foreign currency transactions must convert amounts to rand using the average exchange rate for the year of assessment, or the spot rate on the last day of the year of assessment, depending on the specific circumstances.¹⁰

South Africa operates a provisional tax system, requiring companies to make advance payments of their estimated tax liability. Two provisional tax payments are due during the year of assessment: the first payment is due six months after the beginning of the tax year, and the second payment is due at the end of the tax year. A third voluntary payment can be made within seven months after year-end to avoid penalties and interest.^{11 12}

Late submission of returns attracts penalties, and outstanding tax amounts incur interest at the prescribed rate, which is currently 10.75% annually as of September 1, 2025. This rate is set by SARS and is adjusted periodically.^{13 14}

Let's consider a practical example: if your company has a turnover of R22.5 million (approximately £1.5 million) and operates with a profit margin of 10%, giving it a taxable profit of R2.25 million, the corporate tax calculation would be:

At South Africa's standard corporate tax rate of 27%, the tax owed would be:

R2.25 million × 27% = R607,500 (approximately £25,575.75)

When expanding your business to Shouth Africa, the right financial tools will make the process smoother. Using a platform like Wise Business makes it easy to manage international finances. A multi-currency account allows businesses to pay for incorporation costs, registration fees, and government taxes in local currency without paying high exchange rate fees.

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Tax Compliance in South Africa

The key steps to help your company remain fully compliant with South African tax regulations:

• Register with SARS early: After incorporation, companies must register with the South African Revenue Service (SARS) for income tax, VAT (if turnover exceeds the threshold), and PAYE if employing staff. Early registration helps avoid administrative penalties and ensures you can legally conduct business.
• Understand the South Africa corporate tax rate: Corporate income tax applies primarily to incorporated entities such as Private Companies (Pty Ltd). Knowing the applicable rate and keeping accurate records is crucial for timely filing.
• Meet filing and payment deadlines: Companies are required to submit annual income tax returns within 12 months after the end of their financial year. Provisional tax payments are due twice during the year of assessment, with a third optional top-up payment to avoid interest.
• Maintain proper bookkeeping: SARS requires accurate financial statements and supporting documents to be retained for at least five years.¹⁵ This ensures transparency in case of audits.
• Avoid penalties: Late submission of returns or underpayment of taxes can result in penalties and interest charges. Staying proactive with compliance helps minimize risks.

Register early, track deadlines, and maintain clear records to stay compliant and operate confidently within South Africa’s tax system.

International Expansion to South Africa

South Africa presents a highly business-friendly environment to local and international companies. The country is home to over 63 million people, including a 33.1% youth population, creating both a sizable market and a strong workforce. Their economic output is set to grow, with GDP projected to reach $410.14 billion by 2027, and foreign direct investment already stood at $3.44 billion in 2022.¹⁶

Global companies often choose South Africa as their regional base. Around 50% of the 400 foreign multinationals in Africa are headquartered here, making it a proven hub for international operations. Its geographic position at the southern tip of the continent is another positive factor. It offers direct access to the Southern African Customs Union (SACU) and the African Continental Free Trade Area (AfCFTA), opening the door to over one billion consumers. Beyond Africa, South Africa’s membership in the WTO, G20, and BRICS further strengthens its role in the global economy.¹⁶

On top of everything, the infrastructure adds another layer of competitiveness. The country ranks 1st in Africa and 19th globally on the World Bank’s Logistics Performance Index. It has 144 airports with paved runways, a road network of 750,811 km, and some of the largest ports in the world. O.R. Tambo International alone manages 21 million passengers annually. Internet penetration is among the highest on the continent at 98%, ensuring smooth digital connectivity.¹⁶ Natural resources also support investment, as South Africa hosts several global mining giants and is a top 10 renewable energy investment destination among G20 nations.¹⁶

To set up a company in South Africa, you have to:¹⁷

1. Conduct thorough market research.
2. Develop a business plan tailored to local demand.
3. Secure a business name and location.
4. Select the right legal structure.
5. Register your company with the Companies and Intellectual Property Commission (CIPC).
6. Register for tax with the South African Revenue Service (SARS) to pay corporate tax.
7. Open a local bank account.
8. Implement robust bookkeeping systems.

If you have an opportunity to launch your business in South Africa, you should definitely give more consideration to this opportunity. All it asks for is some homework and strategic planning to hit your business objectives.

Read more about the corporate tax in Nevada

Incorporation of Business in South Africa

To incorporate a business in South Africa, entrepreneurs must follow the requirements set out by the Companies Act, 2008¹⁸ and register through the Companies and Intellectual Property Commission (CIPC) or its online portal, BizPortal.

You will need the following to set up your company in South Africa:¹⁸

• Business name: Reserve a unique company name through BizPortal.
• Domain name: Optional but recommended for digital presence, also available through BizPortal.
• Type of business structure: Choose between Sole Proprietorship, Partnership, or Private Company (Pty Ltd).
• Identification documents: A valid South African ID for residents or a passport for foreign directors/incorporators.
• Proof of address: Required for directors and company records.
• Memorandum of Incorporation (MOI): The company’s constitution outlining governance, shareholder rights, and organizational structure.
• Company Number: Issued upon registration with CIPC.
• Tax Number: Issued upon registration with the South African Revenue Service (SARS) to ensure compliance and enable the company to pay corporate tax.

Business entities in South Africa

According to the Companies Act, 2008, the main entity types include:¹⁹

• Sole Proprietorship: The simplest business model for individuals. Not a separate legal entity, the owner is personally liable for debts. Registration with CIPC is not required.
• Partnerships: Formed by two or more people under an agreement. Popular with professionals like lawyers and accountants. Partners share both profits and liabilities, and the entity is not registered as a separate legal structure.
• Private Company (Proprietary Limited or Pty Ltd): The most common corporate entity for investors. It is a separate legal person, requiring registration with CIPC and SARS. Only one director and one incorporator (who can be the same person) are needed, though multiple directors can be appointed.

For professionals in corporate tax manager jobs or corporate tax accounting, understanding these structures is essential since compliance and liability vary. The current corporate tax rate mainly applies to Private Companies, and many enhance their expertise through corporate tax courses to stay compliant.

International corporate tax best practices

Here are some of the best strategies to ensure compliance with local tax laws, save money, and reduce tax burdens when operating internationally.

Stay compliant with local and international tax laws by completing the legal registration process in every country where your business operates. File all required tax returns on time to avoid penalties, and ensure you stay up to date with local tax laws to remain fully compliant. This is particularly important in South Africa, where SARS has robust enforcement mechanisms and penalties for non-compliance.

Companies should also understand and adhere to global standards set by organisations like the Organisation for Economic Co-operation and Development (OECD). With frameworks like Base Erosion and Profit Shifting (BEPS) and the global minimum tax initiatives, companies can ensure transparency, prevent tax avoidance, and avoid legal risks.

Leverage double taxation treaties (DTTs) effectively, as these agreements are essential for ensuring you're not taxed on the same income twice. South Africa has an extensive network of double taxation agreements with over 80 countries, which can significantly reduce your overall tax burden when structured properly.

Maintain up-to-date and transparent financial records, as this helps companies prepare accurate tax returns and reduces the risk of errors that could lead to penalties. Additionally, having organised financial records simplifies the process during SARS audits and investigations, which are becoming increasingly common as the revenue authority enhances its compliance efforts.

Take the complexity out of international expansion with Wise Business

Researching corporate tax is a crucial step when expanding your business into a new country. The next step is setting up the financial infrastructure to handle the complexities of operating across borders, from managing multi-currency cash flow to mitigating FX risk.

The Wise Business account provides the financial tools to make your international expansion to South Africa efficient and simple. It's the one account for managing your money globally.

With a Wise Business account, you can:

• Pay suppliers and initial fees: Pay suppliers, global payroll, and one-off incorporation costs in the local currency.

• Get paid like a local: Use local account details for 8+ major currencies to easily receive payments from customers or investors.

• Manage your money across borders: Hold and exchange 40+ currencies in one account, always with the mid-market exchange rate and low, transparent fees.

• Streamline your accounting: Integrate with tools like Xero or QuickBooks to simplify tracking your company's international finances.

• Empower your team: Provide multi-user access for your finance team and issue expense cards for international spending.

Wise is designed to support every step of your journey, from paying your first registration fee to receiving international payments and managing your global treasury.

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FAQs - Corporate tax in South Africa

Who is liable for corporate tax in South Africa?

All companies that are South African tax residents are liable for corporate income tax on their worldwide income. A company is considered a South African tax resident if it is incorporated in South Africa or if its place of effective management is in South Africa. Non-resident companies are only liable for tax on income sourced within South Africa, such as income from a South African branch or agency.

Are there any tax incentives for businesses in South Africa?

Yes, South Africa offers several tax incentives to promote economic growth and investment. These include small business corporation tax rates for qualifying companies with turnover below R20 million, manufacturing investment allowances, research and development tax incentives, and special economic zone benefits. The government also provides various sector-specific incentives for industries such as film production, renewable energy, and beneficiation of mineral resources.

What is the tax treatment of dividends in South Africa?

Dividends paid by South African companies are generally subject to dividends tax at a rate of 20%, which is withheld by the paying company. However, dividends paid between South African resident companies are exempt from dividends tax. The rate may be reduced under applicable double taxation agreements. Recipients can claim the dividends tax as a credit against their income tax liability in certain circumstances.

What is the process for registering for corporate tax in South Africa?

Companies must register for income tax with SARS within 60 business days of commencing business activities or within 21 business days of becoming liable for any tax. Registration can be completed online through the SARS eFiling platform or at a SARS branch office. You'll need to provide company registration documents, details of directors and shareholders, and information about your business activities. Once registered, you'll receive a tax reference number that must be used for all tax-related correspondence.

What are the common pitfalls to avoid regarding corporate tax in South Africa?

Common pitfalls include failing to register for provisional tax, which can result in penalties and interest charges; not maintaining proper supporting documentation for tax deductions, which can lead to disallowed expenses during audits; missing filing deadlines, which attract automatic penalties; incorrectly calculating transfer pricing for related party transactions; and failing to comply with controlled foreign company rules for offshore subsidiaries. It's also crucial to ensure proper VAT registration and compliance, as this often goes hand-in-hand with corporate tax obligations.

Sources used in this article:

1. PwC Tax Summaries: South Africa Corporate Income Taxes
2. InvestSA: Special Economic Zones
3. SARS: Double Taxation Agreements
4. SARS: Research and Development Incentive
5. SARS: Mineral and Petroleum Resource Royalty
6. SARS: Capital Gains Tax
7. Moore Global: International Corporate Tax - South Africa
8. SARS eFiling
9. PwC Tax Summaries: South Africa Corporate Tax Administration
10. SARS: Exchange Rates
11. SARS: Guide to Provisional Tax
12. SARS: Provisional Tax
13. SARS: Tables of Interest Rates
14. SARS: Interest Rates Table (PDF)
15. SARS: Record Keeping
16. InvestSA: Brochure (PDF)
17. FNB: Industry and Economy
18. Doing Business: How to Register a Business
19. gov.za: Companies Act (PDF)

Sources last checked 10/09/2025