A complete guide to South African taxes

Published on 2nd June, 2025 at 10:14 am

Nothing’s certain but death and taxes, but goodness, there are a lot of different kinds of taxes out there. If your head’s spinning trying to keep track of what you owe and why, here’s a handy cheat sheet.

Reading time: 8 minutes

In this article, you’ll learn about:

• The different types of tax you may face.
• When you’ll pay tax.
• How to prepare for different taxes in South Africa.

We’ve put together this handy cheat sheet to make sure you’re up to speed. Keep it handy so you can refer to it when you need it!

How to get ahead of your tax

Be prepared. The old Scouting motto has never let us down yet. Get your documents in order, have a safe place to file your paperwork, and keep important receipts. Understand what you might be in for, and half your work is already done.

Nicci Courtney-Clarke, COO and Head of Tax at TaxTim, says you should make sure you have your IRP5/IT3a (needed for income tax returns), medical aid and investment certificates, retirement annuity and donation certificates, and your logbook for business travel, if this applies to you.

“If you run your own business as a sole proprietor, freelancer, independent contractor, or earn rental income, it’s essential to maintain accurate records of all income and expenses, along with supporting invoices and receipts, as SARS may disallow claims without proper documentation,” she says.

“Understanding which deductions you can claim – like home office expenses and wear and tear – and ensuring you have the necessary paperwork will help you maximise your tax refund or minimise your tax liability.”

Personal income tax and PAYE

Yep, when you get money in, you must pay your share to the taxman. If you receive a salary, you’ll pay tax according to the Pay-As-You-Earn (PAYE) system, which means your employer deducts a portion of your income and pays it over to SARS on your behalf. This also means that you should file an income tax return every year – even if you earn a low salary – because, depending on your circumstances, you might have paid in too much or too little. You can start to file your tax return from July every year.

Read more: Your guide to personal income tax.

Value-Added Tax (VAT)

VAT is a consumption tax levied on goods and services in South Africa. Everyone pays VAT when shopping for groceries at the supermarket, for example. You also pay VAT on services, and if you’re registered as a VAT vendor, you can claim back the VAT you paid on goods and services in your supply chain.

VAT affects all businesses and consumers in South Africa and is currently levied at 15%. Read up about VAT and how to calculate it here.

“You should register as a VAT vendor if you expect your turnover to exceed R1 million in a 12-month period. As soon as your turnover hits R1 million, you are required by law to become a VAT vendor,” says Courtney-Clarke.

Customs and Excise Duty

As a consumer, you’ll probably also pay customs on imported goods brought in from overseas (bought from international online stores) and excise duty on some goods made locally.

We usually refer to them as the “sin taxes” levied on tobacco and alcohol products, but other goods can also be taxed in this way. The exact rate varies according to a category of goods, but for the last few years, alcohol taxes have increased markedly.

Capital Gains Tax

Capital gains tax is a form of income tax and is most often levied when you sell a property or investment (e.g., shares) for a profit, i.e., the proceeds from the sale are more than the purchase price plus any amount spent on renovations and improvements. You’ll pay tax on a portion of the capital gain, rather than the full amount.

Use TaxTim’s capital gains tax calculator.

Transfer Duty

Becoming a homeowner means there’s a whole new set of taxes to pay. Transfer duty is based on the transfer costs of buying a new property, which in turn is worked out on a sliding scale. The more expensive your property, the more your transfer costs will be, and in turn, the more transfer duty you’ll pay. Properties selling for up to R1,1 million are exempt from transfer duty.

Municipal Property Rates

In addition to paying your bond every month, you’ll also be budgeting for property rates and other charges levied by your municipality. Municipal rates are local taxes paid directly to your municipality, rather than to SARS. They’re based on the property’s value as calculated by the municipality. This municipal value is separate from the market value of your property, which fluctuates according to buyer demand and market movements. Municipal values are updated every four years, and when they are, your rates will also be affected.

If you live in Cape Town, you may also pay an additional rate for a city improvement district (CID). This rate goes towards supplementary municipal services, such as public safety, cleaning, infrastructure maintenance, and so on. Read up about CIDs here.

Estate Duty

This is a special tax levied if the net value of your estate when you pass away exceeds R3,5 million. It is levied at 20% of the dutiable amount up to R30 million, or 25% if over R30 million.