Tag: Value Added Tax (VAT)

After the false start of 19 February, Finance Minister Enoch Godongwana tabled the 2025 Budget on 12 March. The main tax policy proposals include raising the Value Added Tax (VAT) rate by 0.5% in each of the next two years. This will bring VAT to 16% in 2026/2027. It will be accompanied by no inflationary adjustments to personal income tax brackets, rebates, or medical tax credits.

The shocks, surprises and shortfalls in the initial budget on 19 February 2025 made way for a reworked National Budget. This new budget is marked by cuts, compromises and curveballs. Although Finance Minister Enoch Godongwana’s first budget attempt was unexpectedly stopped three weeks ago, a higher VAT rate is still on the table.

The updated South African National Budget for 2025, tabled on 12 March, tries to balance the need to address the country's fiscal challenges. At the same time, it aims to stimulate economic growth and improve public services. Over and above these priorities, it also balances political pressure from the Government of National Unity (GNU).

We note the tabling of the delayed 2025 National Budget. As with previous budgets, the steps announced by Finance Minister Enoch Godongwana highlighted the need for higher growth rates in the domestic mining sector and the broader economy.

Parliament tabled the 2025 budgets on 19 February 2025, but they were not approved. The budgets proposed a 2% increase in the Value Added Tax (VAT) rate. The proposal suggested raising the VAT rate from 15% to 17%.

We cannot tax our society into behaving better. No matter how much we would like to believe otherwise, it remains ineffective. Behaviour-adjusting taxes, like sin taxes on alcohol and cigarettes, have failed to curb excessive smoking or drinking. The sugar tax has placed a heavier financial burden on the working class. However, it has not achieved its intended behavioural change.

Small businesses in South Africa manage multiple priorities, such as business efficiency, innovation and growth. Many overlook the value of claiming the full range of tax benefits available to them amidst these daily challenges.

As the nation waits for the rescheduled delivery of the Budget Speech on 12 March, many wonder what tax announcements to expect. The delayed budget and VAT hike mean small business owners, in particular, remain on tenterhooks as they anticipate the rate hike. This increase would see the VAT rate rise from 15% to 17%, which could significantly impact businesses.

The South African Revenue Service (SARS) increases customs duties for online retail orders as part of a broader strategy to promote local businesses and address global supply chain imbalances. The clothing and textile industry has faced widescale criticism for controversial environmental, social, and governance (ESG) practices. South African consumers may imagine themselves to be far from the hub of these issues. However, we are all participants in the global supply and demand for fashion.

The South African Revenue Service (SARS) has marginally improved refund payment time frames, but it needs to prioritise improving service delivery and building trust with taxpayers. In his recently delivered Medium-Term Budget Policy Statement (MTBPS), Finance Minister Enoch Godongwana announced a tax revenue shortfall of R22.3 billion.