The 2nd Provisional Tax deadline is 28 February — and this is where SARS penalises mistakes.
For many South African small and medium-sized businesses, February is the highest-risk month of the tax year.
The 2nd Provisional Tax submission, due by 28 February, is where SARS expects your company’s most accurate estimate of taxable income for the full year. Getting this wrong — even unintentionally — can lead to penalties, interest, and cash flow shocks later on.
If your provisional tax is based on outdated figures, rough guesses, or incomplete records, now is the time to pay attention.
What Is Provisional Tax?
Provisional tax is not an extra tax. It is a system that requires companies to pay their income tax in advance, spread over two mandatory payments, with an optional third top-up. This system helps SARS collect tax revenue more evenly and ensures that businesses don’t face a large tax bill at year-end.
Key Provisional Tax Deadlines for Companies
- 1st Provisional Tax Payment: Due 6 months after the start of the company’s financial year (e.g. 31 August for a February year-end).
- 2nd Provisional Tax Payment: Due at the financial year end (e.g. 28/29 February for a February year-end).
- 3rd Optional Top-Up Payment: Due 6 months after the financial year end (e.g. 31 August for a February year-end).
The February submission is the one SARS scrutinises most closely
Why the 2nd Provisional Submission Is High Risk for SMEs
Many business owners submit their February provisional tax return while:
- Final management accounts aren’t ready.
- Income has fluctuated during the year.
- Expenses haven’t been properly assessed for tax.
- Cash flow is already tight.
The result? Underestimated taxable income — often without realising it.
This is common — and understandable — but risky.
Underestimation Penalties: The Rule That Catches Most Businesses Out
SARS applies specific underestimation penalties to the 2nd provisional tax submission.
If your February estimate:
- Is less than 90% of your final taxable income, and
- The shortfall exceeds the basic exemption,
SARS may treat the estimate as a negligent underestimation.
This can result in:
- Underestimation penalties
- Interest on the underpaid tax
- A significantly higher tax bill once your final assessment is issued
Importantly, SARS does not require intent to impose these penalties. Even honest mistakes — based on incomplete records or outdated figures — can trigger penalties if the estimate falls below the required threshold.
For many SMEs, this risk only becomes visible months later, when cash flow is already under pressure and penalties are unavoidable.
Consequences of Not Filing or Underestimating
1. Penalties and Interest
- Up to 10% late payment penalties
- Monthly interest until the balance is settled
2. Unexpected Cash Flow Pressure
- Large lump-sum payments months later
- No opportunity to budget or plan ahead
3. SARS Compliance Risk
- Repeated underestimation can flag your business for closer review
Tips to Avoid These Issues
- Use a professional accountant to help estimate taxable income more accurately.
- Keep financial records up to date throughout the year.
- Review your performance monthly or quarterly to ensure you’re tracking correctly.
- Consult before submitting: Your accountant can guide you in revising your estimate before the 2nd submission if needed.
Why Optigrow?
At Optigrow, we help small and medium-sized businesses navigate provisional tax with confidence. We:
- Prepare accurate, defensible provisional tax estimates.
- Submit returns on time and in line with SARS requirements.
- Identify risks before SARS does.
- Help you plan tax payments to protect cash flow.
Your provisional tax is reviewed with the oversight of a Chartered Accountant who understands the realities of running a business in South Africa — not just the theory.
Don’t Let February Mistakes Cost You Later
Provisional tax is more than a compliance exercise. When managed correctly, it prevents penalties, stabilises cash flow, and removes year-end tax surprises.
The 2nd Provisional Tax deadline is 28 February.
If you’re unsure whether your estimate is accurate — that’s already a risk.
Contact Optigrow today to review your provisional tax submission and stay compliant, confident, and in control.
