Turnover Threshold

What is a turnover threshold?

A turnover threshold is a specific income limit used to determine whether your business qualifies for certain tax rules, compliance requirements, or reporting exemptions in South Africa. It refers to your total revenue over a 12-month period – not profit – and is used by institutions like SARS and the CIPC to apply different rules to businesses of different sizes.

Turnover thresholds are especially important when it comes to things like VAT registration, B-BBEE classification, and annual return filing fees.

Why does the turnover threshold matter?

Turnover thresholds help determine which tax and compliance rules apply to your business. For example:

  • VAT registration becomes compulsory if your turnover exceeds R1 million in a 12-month period.
  • Small Business Corporation (SBC) tax benefits apply if your turnover is below R20 million.
  • B-BBEE classification changes based on your turnover:
    • Under R10 million = Exempt Micro Enterprise (EME)
    • R10 million – R50 million = Qualifying Small Enterprise (QSE)
    • Over R50 million = Generic Enterprise

Knowing your annual turnover helps you stay compliant, avoid penalties, and unlock incentives designed for small businesses.

How do I calculate my turnover?

Your turnover is the total income your business earns from sales and services during the year, excluding VAT, but including all revenue before deducting expenses.

To calculate it:

  • Add up all sales, service fees, and operating income for a 12-month period.
  • Exclude any capital gains, investment returns, or once-off windfalls.

If you’re unsure about your turnover or how it affects your tax or compliance status, it’s a good idea to speak to a registered tax practitioner.

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