ARTICLE · 14 APRIL 2025

Fiscal Framework: VAT And Unadjusted Tax Brackets In SA

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On 2 April 2025 the majority of the South African National Assembly voted in favour of the adoption of the fiscal framework of the National Assembly's standing committees on finance.

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Thabiso Montsho

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On 2 April 2025 the majority of the South African National Assembly voted in favour of the adoption of the fiscal framework of the National Assembly's standing committees on finance.

The fiscal framework, in its current form contains two major issues, these being:

Unadjusted tax brackets. While the fiscal framework does not increase personal income tax rate in the current financial year, personal income tax revenue will nevertheless increase due to tax brackets remaining unadjusted. This bracket creep has not garnered the same level attention as the VAT issue discussed below; and
1% VAT increase over a two-year period. In terms of the fiscal framework as tabled and approved by the National Assembly, VAT will be raised annually by 0.5% over the next two years, raising the VAT rate from the current 15% to 16%.

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