What Is Provisional Tax and Must I Pay It?
Quick Answer
What Is Provisional Tax and Must I Pay It?
Provisional tax is not a separate tax – it is paying your normal income tax in advance, in two instalments (end August and end February) with an optional third top-up (end September). All companies are provisional taxpayers, as is anyone earning income that has no PAYE deducted.
What this means in plain language
PAYE employees have tax deducted monthly; everyone else – companies, sole proprietors, freelancers, landlords – pays it themselves in advance, based on an estimate of the year’s income. The IRP6 return is the vehicle.
The trap is the estimate: underestimate by too much and SARS adds a 20% underestimation penalty at the second period. Estimate honestly, then top up in the optional third period if the year beat expectations.
Who this applies to
- All companies – automatically provisional taxpayers
- Sole proprietors, freelancers, landlords and anyone with income outside PAYE
Step by step
- Register as a provisional taxpayer on eFiling (companies are registered automatically).
- First period (end August): estimate annual income and pay half the expected tax.
- Second period (end February): refine the estimate and pay the balance.
- Optional third period (end September after year-end): top up to avoid interest.
- File the normal annual return (ITR12/ITR14) afterwards to square up.
What it costs
| Item | Cost / detail |
|---|---|
| Filing IRP6 returns | Free |
| Underestimation penalty | 20% of the underpaid amount at the second period (subject to SARS rules) |
Common mistakes to avoid
- Thinking provisional tax is extra tax – it is the same income tax paid earlier.
- Copying last year’s estimate while the business doubled – the 20% penalty lands.
- Missing the August payment because the year “only ends in February” – the first period is mid-year.
A South African example
A Stellenbosch wine consultant estimates R600,000 profit. She pays provisional tax on that estimate in August and February. The year actually delivers R700,000 – so she tops up in the third period and avoids underestimation interest.
Related questions
- SARS Tax for Small Businesses: The Complete 2026 Guide
- What Is Turnover Tax in South Africa? (2026 Rules)
Always verify this information with official South African government sources. Rules, fees and thresholds change. Check SARS, CIPC, the Department of Employment and Labour or gov.za before you act.
Frequently Asked Questions
Who must register as a provisional taxpayer?
All companies, and any individual earning income without PAYE deducted – sole proprietors, freelancers, commission earners and landlords. Salaried employees with only PAYE income are not provisional taxpayers.
When are provisional tax deadlines?
First period: end of August. Second period: end of February. Optional third top-up: end of September (for February year-ends). Companies with different year-ends follow their own cycle.
What happens if I underestimate provisional tax?
If your second-period estimate falls too far below your actual or a prescribed “basic amount”, SARS levies a 20% penalty on the shortfall, plus interest on late payment.
Official sources
About BizAnswers: BizAnswers is a privately owned South African company – not a government department. Our guides are free to read and show you how to do things yourself through official channels. If you would rather have the paperwork handled for you, we assist individuals and businesses with filing their South African tax returns and staying compliant, which is a paid service, not a free government service. Contact us for help.
Last reviewed: September 2026 by the BizAnswers editorial team. How we write and check our guides.
New guides on BizAnswers:
You May Also Like
What Is a SARS Tax Number and How Do I Get One?
SARS Tax Debt: How Does a Payment Arrangement Work?
