South Africa’s Budget 2025 uncertainty continues

SOUTH AFRICA - Report 30 Apr 2025 by Iraj Abedian

The turbulence surrounding South Africa’s 2025 Budget has shown no signs of easing. Initially postponed from its traditional February slot to March 12—marking an unprecedented delay—the Budget has continued to face intense political debate, particularly over the proposed value-added tax (VAT) increases. As we highlighted in a previous report, key opposition parties, including the Democratic Alliance (DA), Economic Freedom Fighters (EFF), and uMkhonto weSizwe (MK) Party, strongly rejected any VAT hikes. This widespread opposition cast serious doubt on the Budget’s chances of passing through Parliament—and, as expected, those concerns have now materialized.

While Budget 2025 was finally adopted in the National Assembly on April 2 after much political maneuvering that also pitted the DA against the ANC— the two biggest parties in the Government of National Unity (GNU)—this was not the end of the debate surrounding the Budget. On April 24, the Minister of Finance announced the upcoming introduction of the Rates and Monetary Amounts and Amendment of Revenue Laws Bill (Rates Bill), confirming that the VAT rate will remain at 15% from May 1, 2025. This marks a significant reversal of the VAT hike proposed in the March 12 Budget, which had aimed to raise the rate by 0.5 percentage points during FY2025/26 and again in FY2026/27.

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