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The National Treasury’s recent introduction of the Rates and Monetary Amounts and Amendment of Revenue Laws Bill has sparked concern across industries, especially among taxpayers and business leaders. Despite public pushback and an urgent legal challenge, the bill includes value-added tax (VAT) increases over the next two years, among other tax adjustments.

If you’re a business owner, trustee, director, or individual taxpayer, these proposed changes could affect your financial planning, pricing strategies, and even compliance obligations. Let’s unpack what’s happening and what you should be aware of.


WHAT’S IN THE BILL?

On 12 March, National Treasury published the draft bill, which includes:

  • A VAT increase from 15% to 15.5% effective 1 May 2025
  • A second VAT increase from 15.5% to 16% effective 1 April 2026
  • Expansion of Schedule 2 (zero-rated VAT items), potentially adding:
    • Offal
    • Dairy liquid blends
    • Canned beans and peas

These amendments were introduced despite ongoing legal objections and political negotiations.


WHAT IF THE BILL IS NOT PASSED BY 1 MAY?

This is where uncertainty sets in:

  • If a no-vote happens before 1 May: VAT increases cannot be implemented.
  • If a no-vote happens after 1 May: Legal and practical uncertainty arises.
  • If the bill is passed in its current form: VAT increases will proceed as scheduled, and zero-rated items will only be added after full parliamentary approval.


LEGAL OPINIONS

Charles de Wet (ENSafrica) and Gerhard Badenhorst (Cliffe Dekker Hofmeyr) both point out that:

  • Parliament is currently in recess, making timely debate and voting unlikely.
  • The bill’s legal mechanisms may still be amended before it enters the National Assembly.
  • Any attempt to reverse a VAT increase post-1 May will require another legislative act or sufficiently lawful notice.

In short, even if there’s strong opposition, reversing course after 1 May will be complex and potentially ineffective.


WHAT DOES THIS MEAN FOR YOU?

  1. Watch the timing – May Day is the de facto deadline for legislative action or risk automatic increases.
  2. Prepare for higher VAT rates – If you run a VAT-registered business, model the 0.5% and eventual 1% increase on your margins.
  3. Look out for zero-rated item updates – But note these won’t apply until legislation is passed.
  4. Monitor updates from Treasury and SARS – Guidance on compliance will follow if the bill is passed.


HOW TO STAY READY

Now is the time to:

  • Reassess your pricing and cash flow models.
  • Communicate with clients and suppliers about potential price adjustments.
  • Speak with your accountant or tax advisor about your sector-specific implications.
  • Watch for parliamentary announcements in late April.


CONCLUSION

South Africans are bracing for potential VAT increases at a sensitive economic time. While the inclusion of additional zero-rated items provides slight relief, the overall impact on consumers and businesses could be significant. The key lies in when Parliament acts – or doesn’t.

As the 1 May deadline approaches, the risk of unintended consequences rises. Being informed, adaptable, and proactive will help you stay ahead of this fiscal uncertainty.


DISCLAIMER

Nothing in this article and/or post should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure accuracy, Tax A Sured (Pty) Ltd does not accept any responsibility for consequences of decisions taken based on this article and/or post. It remains your own responsibility to consult the relevant primary resources when taking a decision.

About Tax A Sured

Tax A Sured Pty Ltd is a small firm who offers bespoke services and our approach to commitment towards our clients' overall satisfaction sets us apart from the rest. We are here to help. We undertake to stay informed and to grow your business and your wealth with informed tax planning and ease of mind of assured compliance.

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Tax A Sured (Pty) Ltd is a small firm who offers bespoke services and our approach to commitment towards our clients' overall satisfaction sets us apart from the rest.