South Africa to Raise VAT Amid Budget Uncertainty

• South Africa plans to increase the Value-Added Tax (VAT) rate in two stages.
• The VAT rate will rise to 15.5% on May 1, 2025, and to 16% on April 1, 2026.
• The government will expand the VAT zero-rated food list to include canned vegetables, dairy liquid blends, and specified organ meats.
• Social grants will increase, but individual income tax brackets, rebates, and medical tax credits will remain unchanged.
• Transfer duty rates on property transactions not subject to VAT will be adjusted on April 1, 2025.
• The budget has faced resistance from major political parties.
• The ruling African National Congress (ANC) needs support from at least one major opposition party to pass the budget.
• If the budget is not passed by April 1, the government can operate on up to 45% of the previous year’s budget until parliamentary approval is secured.
• The VAT increase can take effect from May 1, 2025, even if the budget is not yet passed.
• Parliament will review the budget in three stages: approving the fiscal framework, passing the division of revenue bill, and voting on the appropriation bill.
• Lawmakers have until April 3 to approve the fiscal framework, but delays could extend the process.

Source: africataxreview.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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