PAYE, Provisional Tax & VAT: What You’re Responsible for as an SME

PAYE – Pay-As-You-Earn (If You Have Employees)

PAYE is tax that you withhold from your employees’ salaries and pay over to SARS on their behalf.

Your responsibilities:

• Register for PAYE when hiring staff
• Submit an EMP201 return monthly (by the 7th)
• Pay over the withheld tax amounts
• File EMP501 reconciliations twice a year (May & October)
• Issue IRP5s to employees

Failing to pay PAYE on time can lead to heavy penalties and create a poor compliance record for your business.

Provisional Tax (If You’re Not on PAYE)

Provisional Tax applies to business owners, freelancers, or anyone not earning a regular salary with PAYE already deducted.

Your responsibilities:

• Submit two IRP6 returns each year:
  • First: end of August
  • Second: end of February
• Estimate your total income and pay tax in advance
• Submit your annual return (ITR12 or ITR14) later in the year

Underestimating or paying late could lead to interest and penalties. Working with an accountant helps ensure accurate projections and timely payments.

VAT – Value-Added Tax (If You’re Registered)

VAT is a tax you add to the sale of goods or services once your turnover exceeds R1 million annually (or voluntarily if above R50,000).

Your responsibilities:

• Register for VAT if required
• Charge 15% VAT on taxable supplies
• Submit VAT201 returns monthly or every 2 months
• Pay VAT collected to SARS
• Keep detailed VAT records for audits

Incorrect VAT returns or missing payments can trigger audits and SARS penalties.

Don’t Guess—Get Help

Many SME owners try to handle all of this on their own—but the risk of getting it wrong is high.

SG&CO helps SMEs across South Africa:

• Register correctly for PAYE, VAT, and Provisional Tax
• Meet every deadline
• Avoid penalties
• Simplify tax management