Parliament still needs to pass the legislation that was announced in the budget speech
The Minister of Finance on March 12, 2025, announced a potential increase in the value added tax (VAT) rate during the budget speech (read TaxNewsFlash). The proposed increase of 0.5 percentage point may take effect on May 1, 2025, with another 0.5 percentage point increase expected on April 1, 2026, pending parliamentary approval.
The last VAT rate increase occurred in 2018, making transitional provisions crucial for vendors. These provisions determine the applicable VAT rate based on transaction timing relative to the effective date of the increase. They do not replace the time-of-supply rules in section 9 of the VAT Act but provide specific rules for applying the correct rate during a rate change. Key trigger points include the date of delivery for goods, the date of registration for fixed property sales, the date of possession for rental agreements, and the date services are performed. Special rules apply to fixed property used as a dwelling if a written agreement is concluded before the effective date.
Vendors may need to assess their enterprise resource planning (ERP) and accounting systems, as manual record-keeping may be necessary so that the correct VAT rate is applied. It is also important to be familiar with the transitional provisions and implement processes to monitor VAT rates on a transaction-by-transaction basis.
Read a March 2025 report prepared by the 乐鱼（Leyu）体育官网 member firm in South Africa