SMMEs for Taxpayers Connect Issue 12 - August 2025
Welcome to our latest newsletter!
Small, Medium, and Micro Enterprises (SMMEs) are one of the pillars of South Africa’s economy. This is why SARS was enthusiastic about celebrating the 9th International SMME Day, which is held annually on 27 June.
This edition of SMME Connect reviews the range of special events held nationwide. Collaborating with many stakeholders, SARS recognised and honoured SMMEs as essential drivers of the country’s economic development. SARS also participated in the Manufacturing Indaba; an Exhibition held at Sandton Convention Centre from 15–16 July 2025; Standard Bank–SACCI Export Launch Programme in Durban; and the SA Business Forum’s breakfast workshop on the best finance model for SMMEs in Soweto.
SARS set up one-stop shops at every occasion. This enabled SMMEs to gain access to SARS services in a single location rather than moving between offices.
Also in this edition is information about Turnover Tax. Remember that Turnover Tax filing and payment are due on 31 August 2025. Make sure you are registered.
Provisional tax payments and tax returns of the more than 53.18% SMMEs who have a financial year-end of February are due on 31 August. Don’t find yourself on the wrong side of the law. Make compliance your number-one priority.
We invite you to join us as we reflect on International SMME day and the inspiring stories of SMMEs.
International SMME Day Reflections
Provisional Tax: What Must SMMEs Do?
Turnover Tax
Education Initiatives
What’s New?
International SMME Day Reflections
SARS and its partners commemorated International SMME Day with events held nationwide. A highlight of the initiative was a collaborative event at Umfolozi TVET College (Esikhawini Campus), where Dan Zulu, SARS Director of Taxpayer Engagement for KwaZulu-Natal, underscored the critical role of SMMEs in driving economic growth. He praised their resilience, ingenuity, and significant economic impact. SMMEs contribute approximately 40% to the national GDP, generating R528 billion and accounting for 28.48% of net tax revenue for the 2024/25 fiscal year. The event fostered greater awareness among attendees regarding their economic significance.
International SMME Day was also observed at the University of Venda, where SARS reiterated the importance of tax compliance. Additionally, the Amapiano Africa Summit 2025, hosted at Constitution Hill, provided an important platform for engaging with the creative sector, particularly the rapidly expanding Amapiano music genre. With more than 1 800 delegates from multiple African countries, the summit spotlighted the genre’s economic promise, its international reach, and the pressing need for sectoral formalisation and tax compliance. Senior SARS officials were deployed across several regions, including Western Cape Region (Paarl and Cape Town), Rustenburg, Mahikeng, Mbombela, Emalahleni, Rand West City, Botshabelo, Qwaqwa, and Nelson Mandela Bay.
Provisional Tax: What Must SMMEs Do?
Provisional tax is not a separate type of tax. It’s a way for SARS to collect income tax from individuals or businesses who do not earn a regular salary from which PAYE (Pay-As-You-Earn) is deducted. This includes:
- Freelancers, sole proprietors, and consultants.
- Companies or trusts.
- Individuals who earn additional income (like rental income or investment income).
How It Works
A provisional taxpayer must request and submit a return (IRP6) for the first and second period even if, according to the result of the provisional tax calculation, the total amount of tax due and payable is “nil” (0). These are the deadlines for provisional tax:
- First payment: end of August.
- Second payment: end of February (end of tax year).
- Third/top-up payment (optional): end of September (if needed to avoid penalties).
These payments are based on estimated taxable income.
Why Is Provisional Tax Important?
It’s a way to pay income tax in advance. This system ensures that the taxpayer does not accumulate a large tax debt that is due at the end of the assessment period. Provisional tax spreads the income-tax liability over the relevant year of assessment, making it easier for taxpayers to manage their finances.
Penalties for Underpayment and Non-payment
If your provisional payments are less than 90% of your actual tax due, SARS will charge:
- Additional tax (penalty): 20% of the underpaid amount.
- Interest: on late or underpaid amounts, calculated daily.
For non-payment, these penalties apply:
- Automatic 10% penalty for late or non-submission.
- 20% penalty on underpaid taxes.
- Interest charged monthly until payment is made.
For example, if your actual tax for the year is R100 000 and you paid only R60 000 in total provisional tax, you’ll owe R40,000:
- If that shortfall is more than 10% of your final tax due, SARS can add:
- 20% penalty = R8 000.
- Plus interest from February until paid.
What to Do
- Calculate estimated income: determine the estimated taxable income for the relevant period. This involves forecasting the income and expenses for your business. For more information on how to work out the amounts due, click here.
- Complete the provisional tax return: fill out the provisional tax return form (IRP6) with the estimated income and calculate the provisional tax payable.
- Pay: pay by the due date to avoid penalties and interest.
Where to Do It
- Online with SARS eFiling
- Log in to your eFiling account: visit SARS eFiling and log in using your username and password.
- Upon successful login, the eFiling Dashboard will be displayed.
- Click on “Returns”
- Click on “Returns Issued”
- Click on “Provisional Tax (IRP6)”
- Select Applicable Period
- Complete your Provisional Tax Return and submit.
NB: Remember to keep detailed records of all calculations and supporting documents to substantiate your provisional tax return.
For more information, go to: Provisional Tax
Turnover Tax
Obligations for August
- What must be done: complete and submit all Turnover Tax returns on time and accurately. This includes calculating the turnover for the relevant period and determining how much tax you owe.
- Forms to use: use the prescribed turnover tax return forms (TT02 and TT03). These forms are readily available on the SARS website or can be obtained from branches (remember first to book an appointment).
- Additional requirements: keep detailed records of all transactions and supporting documents to substantiate the turnover declared. This includes invoices, receipts, and any other relevant documentation.
- Deadlines: be aware when you should file turnover tax and pay. Missing these deadlines can result in penalties and interest charges.
- Register for Turnover Tax before the beginning of the year of assessment or within two months from the date when business begins (see TT01-How to Register for Turnover Tax).
- The first payment is due on 29 August 2025, and the second payment is due on 28 February 2026 (TT02 Payment Advice for Turnover Tax).
- File the TT03 annual return (TT03 Turnover Tax Annual Return).
For more information, go to: Turnover Tax
Latest Scams
Protect yourself from scams, always verify the authenticity of any communication you receive from SARS. Do not click on suspicious links or provide personal information. If in doubt, contact SARS directly through official channels: Contact Us.
For the latest examples visit the Scams & Phishing webpage.
Education Initiatives
SARS offers free tax education workshops at branches nationwide and online, covering various topics regularly. They also provide step-by-step videos, radio sessions, mobile units for outreach, targeted compliance campaigns, seminars, webinars, and collaborate with businesses for registration and VAT verification. The SARS schools project, active in 180 schools, teaches students the value of tax compliance through subjects such as Accounting and Life Orientation.
Visit this page for more information: Taxpayer and Trader Education.
What’s New?
Filing Season 2025
- Auto Assessments: SARS issued Auto Assessments to taxpayers whose tax affairs are less complicated. This process happened on 7–20 July 2025. If taxpayers agree with their Auto Assessment, no further action is required, and acceptance is automatic.
- Filing Periods: non-provisional taxpayers should file from 21 July to 20 October 2025. Provisional taxpayers have until 19 January 2026 to file their returns.
- Refunds: as stated in SARS Service Charter, SARS aims to pay nine out of every ten taxpayer refunds due within 72 hours (if the refund is more than R100). The time it takes to process your refund also depends on whether your banking details are correct, there are no outstanding returns, and you are not being audited.
- If you run your business as a sole trader, remember to declare your business income during this period on ITR12 form
Key Changes for Tax Season 2025
- Expat Residency Declarations: South African expats now need to indicate whether they have re-instated RSA tax residency or not. This is crucial for those who do not intend to reinstate their South African residency.
- Section 6quat Amendment: with effect from 1 March 2025, section 6quat of the Income Tax Act has been amended to allow taxpayers to fully use foreign tax credits for taxes paid on capital gains in the foreign jurisdiction.
- Reporting Requirements for Section 11(nA) and 11(nB): effective from 1 March 2025, employers must report specific details relating to Sections 11(nA) and 11(nB) of the Income Tax Act on the IRP5/IT3(a) tax certificate. These legislative changes align with amendments affecting the ITR12. New requirements:
- Section 11(nA) deductions will be reported under source code 4042 on the IRP5/IT3(a) certificate. This source code pertains to amounts that employees have repaid to their employer — for example, in cases of overpayment or refunded benefits.
- A new source code, 4058, has been introduced to cater for Section 11(nB) deductions. These are amounts repaid by employees to associated institutions or connected persons in relation to their employment. This amount will be captured in the “Other Deductions” field on the IRP5/IT3(a) certificate.
The inclusion of these source codes ensures accurate pre-population of deduction information on the ITR12 and helps SARS verify allowable deductions in terms of the Income Tax Act.
For more information, go to: Tax Season and How does Auto-Assessment work.
Thank you for being a part of our community. We hope you find this newsletter informative and educational.
