VAT increase stopped

2025/04/24

South Africa's Finance Minister Enoch Godongwana has announced that the planned Value-Added Tax (VAT) increase, which was set to begin on May 1, 2025, will not proceed. Instead, the VAT rate will remain at 15%. This decision follows significant political opposition and internal disagreements within the Government of National Unity (GNU). The proposed VAT hike had initially caused delays in the February budget speech and sparked debates among coalition partners. While the reversal aims to alleviate the financial burden on consumers, it is expected to result in an estimated R75 billion revenue shortfall over the medium term. To address this, the Finance Minister plans to introduce revised budget legislation to Parliament in the coming weeks.