Companies don't wait until the end of the year to pay income tax. They pay it in advance, through provisional tax, based on an estimate of the year's taxable income. Every company is a provisional taxpayer automatically.
The three payments
- First payment: within six months of the start of the year of assessment, for half the estimated tax for the year.
- Second payment: by the last working day of the year of assessment, bringing the total paid up to the full estimate.
- Third payment (voluntary): after the year ends, to pay any balance before interest builds up. For a company with a February year-end it's due by the last business day of September; for any other year-end, within six months of the end of the year.
If a due date falls on a weekend or a public holiday, the payment is due on the business day before.
Worked out for two companies
February year-end (the year 1 March 2026 to 28 February 2027):
- First payment: 31 August 2026 (a Monday).
- Second payment: 26 February 2027, because 28 February 2027 is a Sunday.
- Third payment: by 30 September 2027.
June year-end (the year 1 July 2026 to 30 June 2027):
- First payment: 31 December 2026.
- Second payment: 30 June 2027.
- Third payment: by 31 December 2027.
Getting the estimate right
The second estimate matters most. SARS can charge an underestimation penalty of 20% if the second estimate is below 80% of the final taxable income, and a 10% penalty for paying late. Interest on underpaid tax was 10.25% a year from 2 March 2026.
Our company tax calculator shows both payments and their dates for your year-end.
How the payments add up
Take a company that expects taxable income of R1,000,000 for the year ending February 2027. At 27%, the estimated tax is R270,000. The first payment, by 31 August 2026, is half of that: R135,000. The second, by 26 February 2027, brings the total to the full R270,000, so it's another R135,000 if the estimate hasn't changed. If the final figures show the company owes more, the third payment by 30 September 2027 settles the difference before interest runs. If profit rises during the year, raise the second estimate rather than wait for the third payment.
Sources
This is general information, not tax, legal or financial advice.