On 22 February 2023, Minister of Finance Enoch Godongwana delivered his 2023 Budget speech amid stage 6 of load shedding, rising cost of living and high level of youth joblessness. We provide herewith the analysis and the commentary of the some of the major budgetary items:

2022 Projected tax revenue versus projected actual

In the 2022 Budget, the main budget revenue for 2022/23 was projected to be R1.6 trillion. South African Revenue Service (SARS) is now expected to collect tax revenue amounting to R1,69 trillion for 2022/23, an amount which is R93.7 billion higher than the budgeted revenue. The positive variance of R93.7 was as a result of better-than-expected collections mainly from the mining sector due to the sector experiencing favorable high commodity prices. A continued recovery from the pandemic among companies in manufacturing and financial sectors also contributed to this strong revenue performance.

An increased tax revenue without corresponding tax increases serves as an indication that the enforcement tools (tax audits and imposition of penalties) deployed by SARS are starting to bear fruits. 2023 projected revenue

The main tax revenue for the 2023/24 fiscal year is projected to be R1.8 trillion or 25.1 per cent as a share of Gross Domestic Product (GDP) in 2023/24. The attainment of this tax revenue target is based on the projection that South Africa will achieve the real economic growth of 0.9% for 2023. The ability of the Treasury to correctly project the performance of the economy has direct bearing on whether the tax revenue will be collected or not.

The tax-to-GDP is projected to reach 25.4 percent in 2022/23 and expected to reach 25.7 by 2025/26. These percentages are still low as compared to Organisation for Economic Cooperation and Development (OECD) countries average tax-to-GDP of 34.1%.


Businesses are currently experiencing financial hardships caused by poor economic growth and unreliable electricity supply. Much to the taxpayers' relief, the Minister has announced that no significant tax increases will be proposed.

Corporate Income Tax (CIT)

The CIT rate is currently at 27%. No proposed changes to this rate.

Research and development incentives

The research and development incentive was due to end on 31 December 2023. There is now proposal to extend this incentive for 10 years from 1 January 2024.

Expansion of the renewable energy tax incentives

Currently, businesses are allowed to claim costs of the qualifying investment in wind power and concentrated solar energy over a period of three years (50% in year 1, 30% in year 2, and 20% in year 3) in terms of section 12B of the Income Tax Act. The Budget proposed a change to the incentive that will allow businesses to claim 125% of the costs of the qualifying investments in renewable energy with no thresholds on generation capacity in the first year.

Capital Gain Tax (CGT)

CGT is triggered by a disposal or deemed disposal of an asset. The effective rate of CGT remains at 22.4% for companies. No proposed changes.

Value Added Tax

VAT is levied at the standard rate of 15% on the supply of goods and services by registered vendors. No changes in the VAT rate were proposed.

Dividends Tax

Dividends tax is a final tax on dividends at a rate of 20%. No changes were proposed.

Carbon Tax

The carbon tax rate increased from R144 to R159 per tonne of carbon dioxide equivalent, effective from 1 January 2023. The carbon fuel levy for 2023 will increase by 1c to 10c/l for petrol and 11c/l for diesel from 5 April 2023, as required by legislation. It is proposed that the carbon tax cost recovery quantum for the liquid fuels refinery sector increases from 0.63c/l to 0.66c/l from 1 January 2023.

Rooftop Solar tax incentive

To increase electricity generation, the Minister proposed a rooftop incentive for individuals to invest in Solar PV panels. Individuals will be able to claim a tax rebate against their tax liability to the value of 25% of the cost of any new and unused solar PV panels, subject to a maximum amount of R15 000. This incentive will be available for one year, that is, from 01 March 2023 to 29 February 2024.

Download : 2023 SNG Grant Thornton Budget Analyis

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