No VAT Increase from 1 May 2025

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National Treasury issued a media release at midnight announcing the reversal of the proposed VAT increase, originally set to take effect from 1 May 2025. The VAT rate will remain at 15%, despite the earlier Budget announcement of a hike.

This change follows consultations with political parties and Parliament’s finance committees, amid concerns about the impact on consumers and the economy. However, the R75 billion revenue shortfall from not increasing VAT will now require expenditure cuts, prompting the withdrawal of the current Appropriation and Division of Revenue Bills.

What Will Happen Next

Revised bills are expected in the coming weeks, and Treasury will adjust spending plans accordingly to protect fiscal stability. In the meantime, we should advise clients accordingly and stay tuned for further updates on how expenditure reallocations may affect sectors and services.

👉 SARS may redirect additional revenue collections to help offset the shortfall.
👉 Measures to protect low-income households from the VAT increase will now be withdrawn.

This development is critical for tax planning, forecasting, and advising clients on public finance trends.

The Power of One

Treasury’s response to the public outcry clearly demonstrates that when people come together with a shared purpose, they have the power to turn ideas into action and make real change happen.