BREAKING: Godongwana reverses decision on VAT increase
The proposed VAT increase has been reversed. National Treasury issued a statement after midnight to say that the Value-Added Tax rate will remain 15% from 1 May 2025.
In a surprise move, the statement says that Finance Minister Enoch Godongwana decided to withdraw the decision to hike VAT by half-a-percentage point.
It would've taken effect next Thursday. Treasury says the decision follows extensive consultations with political parties and careful consideration of the recommendations of the parliamentary committees.
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Godongwana says that by not increasing VAT, estimated revenue will fall short by around 75-billion-rand over the medium term.
He adds that Parliament will be requested to adjust expenditure to ensure that the loss of revenue does not harm South Africa's fiscal sustainability.
The decision also comes days after a court challenge by the DA and EFF - which questioned the legality of the process used to adopt the increase
