The Minister of Finance released a media statement in the early hours of today, 24 April 2025, announcing that the VAT rate would be maintained at 15%. The VAT rate increase to 15,5% effective from 1 May 2025 has therefore been withdrawn.
As a consequence of this decision, the Minister also announced that "the measures to cushion lower income households against the potential negative impact of the rate increase now need to be withdrawn and other expenditure decisions revisited". The proposed additional food items on the list of zero-rated basic foodstuffs will therefore continue to be taxed at 15%.
Subsequent to the Minister's media statement, formal notice was published in the Government Gazette (Notice No. 6157, 24 April 2025). According to the notice, the Minister will introduce a new Rates and Monetary Amounts and Amendment of Revenue Laws Bill, 2025, in the National Assembly, and in terms of the explanatory summary of the aforementioned Bill contained in the notice, the Bill will provide for inter alia "the reversal of the VAT increases announced in terms of section 7(4) of the Value-Added Tax Act, 1991".
The Value-Added Tax Act, 1991, in terms of section 7(4), empowers the Minister of Finance to amend the VAT rate simply by announcing a rate increase and the effective date thereof in his national annual Budget Speech. This was the only requirement for the increase to take effect from 1 May 2025 and is not reversed by a media statement or a notice to introduce a Rates and Monetary Amounts and Amendment of Revenue Laws Bill. The next step is for the Bill to be introduced in Parliament and for the Parliamentary processes to commence pass the Bill before promulgation by the President.
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