South Africa's new tax laws: What you need to know
South Africa's 2025 budget speech reveals significant tax lawchanges, including stealth taxes and VAT increases, aiming to boost revenue collection and close the funding gap.
Finance Minister Enoch Godongwana's third budget for 2025 has introduced significant changes to South Africa's tax laws. Despite two failed attempts, the latest budget speech delivered in Cape Town reveals key features that impact taxpayers.
Stealth Taxes Remain a Key Feature
The National Treasury has decided not to adjust personal income tax brackets for inflation, resulting in "bracket creep." This means that as salaries increase to keep up with the rising cost of living, individuals may be pushed into higher tax brackets, paying more taxes without an official tax rate increase. The government expects to collect R15.5 billion through this measure, down from the initial estimate of R18 billion, according to BusinessTech.
Value-Added Tax (VAT) Increase
The budget proposes a phased increase in VAT, with a 0.5 percentage point hike from 15% on 1 May, followed by another 0.5 percentage point rise in 2026. This marks the first VAT increase since 2018.
Increased Tax Collection Efforts
To improve tax collection and enforcement, the Treasury has allocated an additional R7.5 billion to the South African Revenue Service (SARS). This allocation aims to increase revenue collection, including recovering debts owed to the fiscus, potentially raising between R20 billion and R50 billion in additional revenue per year.
What This Means for Taxpayers
Taxpayers can expect:
- Increased Tax Burden: Due to bracket creep and VAT increases.
- Improved Tax Collection: SARS will enhance enforcement and collection efforts.
- Potential New Taxes: Upcoming budget proposals may introduce new taxes or adjustments.
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