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Five most common types of taxes in South Africa

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Five most common types of taxes in South Africa

‘Nothing is certain except death and taxes,’ says Benjamin Franklin. Taxes are inevitable payments people encounter throughout their lives. In South Africa, there are different types of taxes to be paid depending on a citizen’s wealth and possessions. These taxes are calculated from March 1 to February 28 of the following year. This is referred to as the tax year.

Out of the many types of taxes in the country, which ones are the most common? Here are five types of taxes you or someone you know might have encountered already:

Personal income tax

Personal income tax is the payment levied by the government to all persons who earn wages, salaries, dividends, interest, and other types of income throughout the year. In South Africa, the annual personal income tax rate ranges from 18% to 45% depending on the person’s income. The maximum non-taxable personal income in the country is R216,200.

A person’s income tax may be lowered by factors such as business-related travel, home office expenses, and medical tax rebates.

Corporate income tax

Corporate income tax is levied from the profits of a corporation. In South Africa, the annual corporate income tax rate is fixed at 28%. However, some corporations can avail of tax deductions from factors such as general and administrative expenses, operating costs, and government subsidies.

Meanwhile, small companies with a turnover of less than R1 million per year can pay a so-called presumptive tax which ranges from 0% to 3%, depending on their income.

A dividends tax with a fixed rate of 20% is also levied on companies in respect of shares listed on a South African stock exchange.

Value-added tax

Value-added tax (VAT) is an indirect levy on the consumption of goods and services. Under South African law, persons or businesses that carry on an enterprise are required to register for VAT if the value of taxable supplies made or to be made is more than R1 million in any consecutive 12-month period.

Fuel tax

Fuel tax is levied from the sale of petrol. Most of the time, the fuel tax is imposed on fuel used for transportation. In South Africa, the fuel tax is R3.83 per litre of petrol.

Motorists usually pay more for each refuel because of the so-called Road Accident Fund Levy which is currently set at R2.18. The revenue raised from this levy is used for compensating motorists, passengers, and pedestrians injured in an accident.

Tariffs

Tariffs are taxes imposed on goods and services imported from other countries. In South Africa, the tariff rate for most imported products is set at 10%. Most office machinery, motorcycles, tobacco, alcohol, and petroleum products are not included in this levy as they have specific excise duties imposed on them.
Due to the many different types of taxes aside from VAT, it can be hard for someone to calculate how much they are supposed to pay. If you are unsure of how much you owe the government, you can always consult an accountant or a tax professional such as those offering their services on Taxstudents. That way, you can be enlightened about the details of your duties.

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