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Government U-turns on VAT hike [video]
Watch the full version of the ' BREAKING: Godongwana gives in as proposed VAT increase scrapped' article – in a minute.
National Treasury has confirmed that the decision to increase value-added tax (VAT) – to take it from 15% to 15.5% – has been reversed.
The proposed VAT hike, which would have come into effect on 1 May, was announced by the Minister of Finance, Enoch Godongwana, when he delivered his delayed Budget Speech for the 2025-2026 financial year, leading to warring between political parties within and outside the ANC-led Government of National Unity (GNU).
Notably, the decision comes after the Democratic Alliance (DA) and Economic Freedom Fighters (EFF) had approached the Western Cape High Court to challenge the adopted fiscal framework, which paved the way for the proposed VAT increase.
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In a statement, National Treasury said Godongwana would 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.
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