Godongwana Confirms Vat Hike

Cape Town - Finance Minister Enoch Godongwana has confirmed that South Africa's Value Added Tax VAT will increase by 0.5 percentage points on May 1, 2025, with another 0.5 percentage point rise planned for April 1, 2026.

Reports on Thursday said that he justified the hike by warning of severe consequences to state finances if it is not implemented, including spending cuts or increased borrowing.

"Government would be immediately forced either to cut expenditure or increase borrowing," IOL quoted Godongwana as saying.

He defended VAT as a broad-based and efficient revenue source, adding that South Africa's current VAT rate remains relatively low compared to other countries.

"In making this decision, the government carefully considered the potential contributions of each of the main tax instruments. VAT is an efficient source of revenue. It is broad based, and its design is simple with minimal exceptions.