South Africa’s Value-Added Tax (VAT) landscape is set for significant changes, as outlined in the draft Tax Laws Amendment Bill (TLAB) and the Tax Administration Laws Amendment Bill (TALAB) for 2025. These proposals, published on August 16, 2025, aim to modernise the country’s VAT regime and address specific industry challenges.
Key proposed VAT amendments
The National Treasury has put forth several notable changes that could impact various sectors. These proposals are expected to be tabled during the 2025 Medium Term Budget Policy Statement (MTBPS).
- VAT on low-value imports
The proposed bills seek to remove the R500 and R100 thresholds for low-value goods. This aims to level the playing field between domestic and offshore suppliers by subjecting all low-value imports to VAT.
- VAT and intermediaries
The rules for VAT accounting by intermediaries are set to be expanded. Currently, intermediaries only account for VAT on behalf of foreign suppliers of “electronic services.” The proposed change would include local suppliers as well.
- VAT on silver
To align with the treatment of gold exports, a new proposal will amend the VAT Act to zero-rate the export of silver. This change addresses the difficulty in meeting documentary requirements for exports when silver from different depositors is melted together.
- VAT on clinical trials
The draft legislation proposes to introduce a new section to zero-rate the supply of testing services and related goods to non-residents. This is intended to help South African suppliers remain globally competitive.
- VAT on education
A significant proposal suggests that all supplies related to educational activities by basic educational institutions be exempt from VAT. This could lead to some private schools having to deregister for VAT, which would trigger a “change in use adjustment” for previously claimed input tax. The National Treasury is also proposing that past assessments finalised before January 1, 2026, not be reopened.
- VAT on foreign airtime vouchers
The proposal aims to subject only the deemed distribution services within South Africa to VAT, while the airtime itself will be considered “out-of-scope” as it is consumed offshore.
- VAT registration
To mitigate risks, SARS may require a site inspection to verify the business address of an enterprise, even if it is home-based.
The VAT Modernisation Project
The National Treasury is continuing its VAT Modernisation Project, which aims to enhance administrative efficiency and reduce errors, fraud, and reliance on manual systems. The 2025 bills propose new definitions and expanded regulatory powers for the Minister, laying the groundwork for a voluntary e-Reporting system. This system is expected to improve compliance and increase transparency in the tax ecosystem.
Sources
- BusinessTech – Big VAT changes coming for South Africa
- Moneyweb – Strong objection against proposal to remove schools from the VAT net