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# Government Withdraws Proposed VAT Increase; Rate Stays at 15%
- URL: https://www.startup.africa/government-withdraws-proposed-vat-increase-rate-stays-at-15/
- Published: 2025-04-24T05:58:35.000Z
- Updated: 2025-05-09T08:15:02.000Z
- Author: Lungile Msomi
- Tags: Latest

South Africa’s value-added tax (VAT) rate will remain at 15% from 1 May 2025, after the Minister of Finance opted against the increase announced in the March Budget. The decision was [announced](https://www.treasury.gov.za/comm%5Fmedia/press/2025/2024042401%20Media%20Statement%20on%20the%20reversal%20of%20the%20vat%20rate%20increase.pdf?ref=startup.africa) by [National Treasury](https://www.treasury.gov.za/?ref=startup.africa) and is set to leave a projected R75 billion revenue gap over the medium term.

To address the shortfall, the Minister of Finance has written to the Speaker of the National Assembly to withdraw the [Appropriation Bill](https://www.parliament.gov.za/storage/app/media/Bills/2024/B5%5F2024%5FAppropriation%5FBill/B5%5F2024%5FAppropriation%5FBill.pdf?ref=startup.africa) and the [Division of Revenue Bill](https://www.treasury.gov.za/legislation/bills/2025/[B7-2025]%20Division%20of%20Revenue%20Bill.pdf?ref=startup.africa), with plans to propose expenditure adjustments. A revised version of both bills is expected in the next few weeks. 

“The decision not to increase VAT means that the measures to cushion lower income households against the potential negative impact of the rate increase now need to be withdrawn, and other expenditure decisions revisited,” said the National Treasury. “To offset the unavoidable expenditure adjustments, any additional revenue collected by SARS may be considered for this purpose going forward.”

Treasury cautions that alternative measures to raise revenue could have greater negative effects on economic growth and employment, and most would not deliver immediate funds to replace a VAT increase. “National Treasury will, however, consider these and other proposals as potential amendments in upcoming budgets,” Treasury concluded.