Tax & SARS Guides
Provisional Tax for South African Companies: A Complete Guide
4 MIN READ · TAX & SARS GUIDES
Provisional tax is not a separate type of tax. It is a system for paying your annual income tax liability in instalments during the year rather than in one large payment at the time of final assessment. Every registered company is automatically a provisional taxpayer — there is no registration process and there is no way to opt out.
| Payment | When Due | Amount to Pay |
|---|---|---|
| First period (IRP6) | Last business day of month 6 of your financial year | Half of your estimated annual tax liability |
| Second period (IRP6) | Last business day of your financial year end month | Total estimated annual tax minus first payment |
| Optional third payment | Within 6 months of financial year end | Top-up to reduce interest if first two payments were underestimated |
| Offence | Penalty |
|---|---|
| Late payment — first or second period | 10% of the outstanding amount, even for one day late |
| Underestimation — taxable income below R1 million, estimate below 90% of actual | 20% of the difference |
| Underestimation — taxable income above R1 million, estimate below 80% of actual | 20% of the difference |
| Interest on outstanding provisional tax | 11% per annum (89bis rate, effective 1 May 2025) |
Your IRP6 submission must include your estimated taxable income for the year. SARS compares this to your final assessed income when you file your ITR14. If your estimate is too far below your actual income, the underestimation penalty above kicks in regardless of whether you paid on time.
For your first year of trading, you may not have prior-year figures to work from. Use your management accounts and year-to-date revenue to make a reasonable estimate. Deliberately under-estimating to reduce the provisional tax payment and investing the difference is a strategy that typically costs more in penalties than it saves. The optional third payment exists specifically to allow you to top up if your first two payments were too low.
Many small business owners get caught by provisional tax because they are focused on running the business and miss the deadline, or they underestimate and face penalties they were not prepared for. A registered tax practitioner can file your IRP6 on your behalf and help you estimate accurately. The cost of that service is typically a deductible business expense.
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