Application for Income Tax Exemption

Requirements

An entity wanting to apply for Income Tax exemption must first register for Income Tax and create an eFiling profile.

Once an entity has been registered for Income Tax, they can apply for Income Tax exemption using their Income Tax Reference Number. The new online process to apply for income tax exemption will be available from 27 February 2026.

During the transition phase from the manual application process to the online process, entities wanting to take advantage of the new online system, with a reduced turnaround time of 21 days, are requested to ensure that they have:

Appointed a Registered Representative
An Income Tax Reference number
Created an eFiling profile
Completed all supporting documents.
Updated the entity’s bank account information.

How to Apply for Income Tax Exemption

SARS is introducing an online registration system for Income Tax Exempt Institutions. This digital system aligns with SARS’s strategic objective to simplify taxpayer compliance through digital platforms.

The pilot will commence on 8 December 2025 until 26 February 2026, and will include the migration and data take-on of all existing records and pilot trade testing. The approach will ensure an improved taxpayer experience once the full system is launched on 27 February 2026.

Once the entity has registered for Income Tax, the entity will be able to utilise the new online process to apply for Income Tax exemption, which will be available from 27 February 2026.

Supporting Documents

Entities wanting to apply for Income Tax exemption are required to provide the following supporting documents:

Entity Founding Document
Clear certified proof of entity address
Clear certified copies of Fiduciary Responsible Persons and Registered Representative:
- ID
- Proof of Residence
Bank Account Details of Entity
Financial Statements (compulsory if applying for Retrospective Approval)
Resolution / Accounting Officer / Public Officer / Main Trustee appointment letter
DSD Registration Certificate if registered with DSD: NPO Directorate
EMIS Number and Certificate if registered with Department of Basic Education as a public / government or independent school
Government Gazette and Act Name for all:
- Public / government schools (wanting to apply for Income Tax exemption and / or S18A status)
- Institutions, board or bodies established by law (wanting to apply for Income Tax exemption and / or S18A status)
- Government of the Republic (National, Provincial, Local spheres) (wanting to apply for S18A status)
Branch of Exempt Foreign Organisation – Proof of exemption form country of origin

Institutions That Qualify for Income Tax Exemption

An organisation must be constituted in one of the following ways to be approved as a tax exempt institution:

Public Benefit Organisation

An NPC incorporated in South Africa.
A trust established in South Africa.
An association of persons formed or established in South Africa. This association of persons must be formally established by adopting a legal founding document
A branch of a foreign tax-exempt organisation.

Recreational Club

An NPC incorporated in South Africa
A society or other association of persons formed or established in South Africa. This society or other association of persons must be formally established by adopting a legal founding document

Membership Associations and Professional Bodies

An NPC incorporated in South Africa
A society or other association of persons formed or established in South Africa. This society or other association of persons must be formally established by adopting a legal founding document

Small Business Funding Entity

An NPC incorporated in South Africa.
A trust established in South Africa.
An association of persons formed or established in South Africa. This association of persons must be formally established by adopting a legal founding document

Home Owners Association

An NPC incorporated in South Africa
An association of persons formed or established in South Africa. This association of persons must be formally established by adopting a legal founding document.

Public Institution

Any institution, board or body established by or under any law (usually gazetted entities or entities required to register under any law). This specifically excludes the following entities:
- Any company or NPC
- Any trust
- Water services providers
- Automatic exemptions or entities exempt in terms of other sections

Companies Owned by Public Institutions

A company incorporated in South Africa (100% shareholding by one or more government institutions) or an association.

Automatic Tax Exemption

The Income Tax Act allows for automatic income tax exemptions of certain entities that do not require additional approval from SARS in so far as Income Tax registration. These exemptions are set out in the Income Tax legislation in detail. Examples of automatic exemption can be seen below. A few of these entities may qualify to issue tax deductible receipts under section 18A (e.g. government and specialised UN agencies) and will be required to submit an application to SARS. These entities will also be required to meet the Commissioner’s reporting requirements.

Type of Exempt Entities and / or Categories	Section of the Income Tax Act (ITA)
Government Spheres (national, provincial, and local), e.g. National and provincial departments, municipalities.	S10(1)(a)
Foreign government and foreign government institutions: UN Specialised Agencies The section provides an exemption in respect of : 1. any sphere of foreign government, 2. institution or body established by a foreign government to perform its function in terms of an official development assistance agreement which is binding in terms of section 231(3) of the Constitution of the Republic,1996 and the agreement provides that the receipts and accruals of that institution, board or body must be exempt, and 3. any multinational organisation providing foreign donor funding in terms of an official development assistance agreement that is binding in terms of section 231(3) of the Constitution of the Republic of South Africa,1996 to the extent- a. the receipts and accruals are derived pursuant to the organisation supplying goods or rendering services in relation to projects that are approved by the Minister after consultation with the Minister of Foreign Affairs b. the agreement provides that those receipts and accruals of that organisation must be exempt and c. the Minister announces that those receipts and accruals ate exempt by notice in the gazette	S10(1)(bA)
Multi-national Banks as defined in the applicable section Section 10(1)(bB) of the provides an exemption from normal tax in respect of the receipts and accruals of the following : 4. African Development Bank established on 10 September 1964; 5. World Bank established on 27 December 1935 including the International Bank for Reconstruction and Development and International Development Association; 6. International Monetary Fund established on 27 December 1945 7. African Import and Export Bank established on 8 May 1993 8. European Investment Bank established on 1 January 1958 under the Treaty of Rome; 9. New Development Bank established on 15 July 2014.	S10(1)(bB)
All funds defined in section 1 of the Pension Funds Act; Pension Funds, Pension Preservation Funds, Provident Fund, Provident Preservation Funds, Retirement Annuity Funds, Beneficiary Funds. Benefit Funds defined in section 1(1) of the Income Tax Act: Friendly societies and Medical Aid Schemes	S10(1)(d)(i)-(ii)
Any registered Body Corporate and Share Block Company in relation to the levies received or accrued: This exemption is applicable to the levies income and other receipts and accruals to the extent that they do not exceed R50,000 per annum, and is automatically available upon selection of the relevant entity type (e.g. Body Corporate or Share Block Company) on submission of an annual ITR14 return. Only entities duly registered under the Sectional Title Schemes Management Act and the Share Blocks Control Act may make this election in their annual returns. * Partial taxation rules apply	S10(1)(e)(i)(aa)-(bb)
The entities listed under Section 10(1)(t): CSIR, SAIDC, SANRAL, ARMSCOR (incl. wholly owned subsidiaries), traditional councils, water service providers, DBSA, compensation funds, reserve funds, licenced mutual associations, NHFC	S10(1)(t)
Political Parties All political parties registered with the Independent Electoral Commission in terms of section 15 of the Electoral Commission Act, 1996 (Act No. 51 of 1996).	S10(1)(cE)

Requirements

How to Apply for Income Tax Exemption

Supporting Documents

Institutions That Qualify for Income Tax Exemption

Automatic Tax Exemption

Related Documents

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