24 April 2025 — South Africa’s Minister of Finance has scrapped the planned Value-Added Tax (VAT) increase set for 1 May 2025, following consultations with political parties and parliamentary committees. The VAT rate will remain at 15%, contrary to the proposal announced in the March Budget.

According to an official media statement released by the Ministry of Finance, the decision not to raise VAT will result in a projected R75 billion revenue shortfall over the medium term. To address this, the Minister has withdrawn the Appropriation Bill and the Division of Revenue Bill and will submit revised versions that adjust expenditure to maintain fiscal sustainability.

The reversal also means that previously proposed measures to shield low-income households from the VAT increase will be withdrawn. The Treasury indicated that any additional revenue collected by SARS may be redirected to offset the gap.

The initial VAT increase was introduced as a response to South Africa’s constrained fiscal environment and aimed at restoring funding for essential public services. The Finance Ministry stated that while alternatives have been suggested, many either pose risks to growth or do not provide immediate revenue relief.

A revised budget package is expected to be presented to Parliament in the coming weeks.

The announcement was confirmed in a social media post by journalist Liz Tandwa, who shared the news shortly after the statement was released. (Source)