South Africa Keeps VAT at 15%, Easing Pressure on Tourism Sector
South Africa’s National Treasury has confirmed that the Value-Added Tax (VAT) rate will remain at 15%, halting a proposed increase that had raised concerns across the tourism and hospitality industry. The reversal follows Finance Minister Enoch Godongwana’s decision to withdraw plans for a 0.5% VAT rise in May 2025, followed by another in 2026. The change, set to be formalised through forthcoming legislation, brings relief to businesses catering to both domestic and international travellers.
The decision follows legal and political pressure, including a court application by the Democratic Alliance and support from the Economic Freedom Fighters, leading to a negotiated settlement. While the Treasury acknowledged a R75 billion medium-term fiscal gap as a result, the move offers stability for the tourism industry, which depends on affordability to remain competitive. Industry leaders have welcomed the development, citing its critical role in job creation and economic recovery.