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VAT INCREASE REVERSAL: NATIONAL TREASURY STATEMENT
- 24 April 2025
- Parliament
- SA Legal Academy
Please note: 1) According to parliamentary papers, the Rates & Monetary Amounts & Amendment of Revenue Laws Bill (reflecting the necessary changes) was tabled shortly after the publication of its explanatory summary on 24 April 2025. 2) On 25 April 2025, the South African Revenue Service issued a media statement on the practical implications of the VAT rate increase reversal for VAT vendors. 3) On 27 April 2025, the Minister issued a statement confirming that he has consented to the recent court order suspending his decision to increase the VAT rate to 15,5%.
National Treasury has issued a media statement announcing its decision to maintain the value-added tax (VAT) rate at 15% from 1 May 2025’. As a result:
- the Appropriation Bill and Division of Revenue Bill tabled in March 2025 with the Budget will be withdrawn; and
- a draft Rates & Monetary Amounts & Amendment of Revenue Laws Bill will be submitted to the National Assembly (among other things providing for the reversal of the controversial 0,5% VAT increase included in the 2024/25 Budget adopted by that House on 2 April 2025).
According to the media statement:
- ‘measures to cushion lower income households against the potential negative impact of the (VAT) rate increase now need to be withdrawn’, and
- ‘other expenditure decisions revisited’.
In that context, the statement refers rather vaguely to ‘any additional revenue collected by the South African Revenue Service’ being ‘considered’ to offset the ensuing ‘unavoidable expenditure adjustments’.
Revised versions of the withdrawn Appropriation Bill and Division of Revenue Bill are expected to be introduced in the National Assembly ‘within the next few weeks’ with the aim of:
- proposing ‘expenditure adjustments’ to:
- cover revenue shortfalls resulting from the decision not to increase the VAT rate, and
- ‘adjust expenditure in a manner that ensures that the loss of revenue does not harm South Africa’s fiscal sustainability’.
Please click the links below for more information:
- media statement
- explanatory summary of draft Rates & Monetary Amounts & Amendment of Revenue Laws Bill
Published by SA Legal Academy Policy Watch
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