Optimism amidst economic challenges

AS SOUTH Africa navigates its way through a landscape marked by low economic growth, high unemployment, and global uncertainty, the recent budget announcement offers a glimmer of hope.

- ASHLEY LECHMAN

Joubert Botha, Head of the Tax and Legal Practice at KPMG Southern Africa, has expressed optimism regarding the government's fiscal direction, particularly noting a significant reduction in the main budget deficit, estimated to decrease from 4.5% of GDP in 2025/26 to 3.7% in 2026/27.

This shift is accompanied by a revised tax revenue projection of R2 trillion, surpassing initial expectations by R21.3 billion, largely attributed to increased collections from Value-Added Tax (VAT) and corporate taxes.

In light of this positive outlook, the government has withdrawn its provision for R20bn in tax increases initially proposed in the May 2025 budget.

Botha highlighted several pivotal tax announcements that will directly impact the economy.

These include:

No increases in personal income tax, corporate income tax, or VAT rates.

Full adjustment of personal income tax brackets and rebates in line with inflation.

An increase in the annual tax-free investment limit from R36 000 to R46 000.