This simplified Turnover Tax based system applies to small sole proprietors, partnerships and incorporated businesses with a turnover of less than R1 million per year.
This system is elective. For years of assessment commencing on or after 1 March 2012, a micro business can voluntarily exit the system at the end of any year of assessment. However, once out of the system the taxpayer will not be permitted to re-enter.
Prior to this, a three year lock-in period existed for exit and re-entry into the system. Personal services rendered under employment-like conditions and certain professional services are excluded from this system.
For years of assessment commencing on or after 1 March 2018, transitional measures have been introduced to eliminate penalties when turnover exceeds
R1 million and the micro-business is obliged to exit the system.