BREAKING: Proposed VAT increase reversed
The Treasury has confirmed that the decision to increase Value Added Tax (VAT) has been reversed.
The proposed VAT hike which would have been effective on 1 May was announced by Finance Minister Enoch Godongwana when he delivered his Budget Speech for the 2025/2026 financial year was a contentious issue for parties within the ANC-led Government of National Unity (GNU
Notably, the Finance Minister's decision comes as the Democratic Alliance (DA) and Economic Freedom Fighters (EFF) approached the Western Cape High Court for the adopted fiscal framework to be scrapped.
In a statement, Treasury said Godongwana will introduce the Rates and Monetary Amounts and the Amendment of Revenue Laws Bills (Rates Bill), which proposes to maintain the VAT rate at 15% from 1 May, instead of the proposed increase announced in the 2025 Budget Speech.
Treasury said the decision to waive the VAT increase followed extensive consultations with political parties, and careful consideration of the recommendations of the parliamentary committees.
Notably, by not increasing VAT, estimated revenue will fall short by R75 million over the medium term.
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