In a major update, the National Treasury announced that South Africa will no longer proceed with the planned VAT increase to 16% in 2025. Following extensive consultations and parliamentary feedback, the VAT rate will remain at 15% from 1 May 2025.
However, this decision leaves an estimated R75 billion revenue shortfall over the medium term. As a result, the Minister of Finance has withdrawn the current Appropriation Bill and Division of Revenue Bill to propose necessary expenditure adjustments. Revised versions will be introduced to Parliament in the coming weeks, aimed at protecting fiscal sustainability while reviewing spending priorities.
The Treasury also noted that previously planned relief measures for low-income households tied to the VAT increase will now be withdrawn, with alternative funding strategies under consideration for future budgets.
For further details, see the official statement here.
