VAT Increase Cancelled

South Africans can breathe a sigh of relief as the government has decided to cancel the planned VAT increase that was set to start on 1 May 2025.

The Minister of Finance announced that the VAT rate will remain at 15%, reversing the earlier proposal to raise it in order to boost government revenue.

This reversal comes after careful consultation with political parties, experts, and parliamentary committees. The Minister acknowledged that the VAT increase would have negatively affected households, especially those with lower incomes, and decided not to go ahead with it.

To address the expected R75 billion shortfall in revenue caused by this decision, the Minister has written to the Speaker of the National Assembly. Parliament will now consider alternative budget adjustments and proposals to close the gap without hurting South Africa’s economic recovery.

The National Treasury said that while the VAT increase would have helped fund important public services, it also recognized that such a move could damage growth and employment. Other options to raise funds will now be explored in the upcoming weeks as Parliament reviews the revised Appropriation Bill and Division of Revenue Bill.

For now, the VAT rate stays the same, and South Africans won’t have to pay more for goods and services.

Issued by the Ministry of Finance
For more info: media@treasury.gov.za