You're likely to foot bill for VAT hike

CHANGES: COMPANIES GIVEN A MONTH BEFORE IMPLEMENTATION OF NEW RATE

- Anathi Madubela

Businesses will be expected to adjust their systems for the 0.5 percentage point increase in the standard value-added tax (VAT) rate, and that expense could be passed on to the consumer.

This is according to Kabelo Moutloatse, senior tax debt and accounting specialist at Latita Africa, who noted that businesses must assess their ability to absorb the increased VAT expenses by reducing their profit margins or determining whether to transfer the burden to customers through higher prices.

"This decision will depend on various factors, including market competition, consumer demand and overall business sustainability. Carefully strategising how to handle the VAT increase will be crucial for businesses aiming to maintain profitability while remaining competitive," said Moutloatse.

During his budget speech, Minister of Finance Enoch Godongwana tabled a proposal to increase South Africa's VAT rate by 0.5 percentage points in 2025-26 and again in 2026-27.