Africa-Press – South-Africa. South Africa’s 2026 tax amendments will stabilise the value-added tax (VAT) rate, extend key incentives, raise thresholds, and refine technical income tax provisions.
These changes are expected to offer targeted relief for consumers, employers, and investors.
The National Treasury’s long-awaited 2026 tax amendment Acts, which introduce a focused set of changes to South Africa’s VAT and Income Tax frameworks, have officially been promulgated.
“These new amendments have immediate practical consequences for taxpayers, employers, and investors,” said Tax Consulting South Africa’s senior tax attorney, Richan Schwellnus.
“The theme is clear – targeted relief through threshold adjustments, coupled with technical refinement of core income tax provisions.”
However, the most noteworthy development is what Treasury has chosen not to do, especially in terms of the Rates and Monetary Amounts and Amendment of Revenue Laws Act.
This Act expressly provides for the prevention of the contentious increase in the VAT rate previously announced by Finance Minister Enoch Godongwana in his initial 2025 Budget Speech.
“This is more than a technical amendment,” he said. “For consumers, it means avoiding higher consumption costs, whilst VAT vendors are able to avoid significant compliance burdens that typically accompany a rate change.”
“At a time of persistent cost pressure, National Treasury’s decision effectively removes what could have been a broad-based tax increase on household spending.”
On the income tax side, Schwellnus explained that the amendments are more technical, but still just as important.
The 2026 Taxation Laws Amendment Act introduces targeted amendments to certain income tax provisions, including changes to retirement fund rules, cross-border taxation, and specific anti-avoidance provisions.
One of the more practical amendments relates to the two-pot retirement system. The National Treasury has refined the definitions of pension, provident, preservation, and retirement annuity funds.
The wording regarding the withdrawal rules for the vested and savings components received particular attention, Schwellnus said.
For example, upon termination of membership, a taxpayer may withdraw the full balance of their savings component even where the balance is below R2,000, rather than being blocked by the previous minimum withdrawal threshold.
“This is a narrow amendment, but one with direct practical relevance for retirement fund administrators and members exiting retirement funds,” he said.
A further important change is the extension of the sunset date for the section 13quat urban development zone allowance from 31 March 2025 to 31 March 2030.
“For developers and investors in qualifying urban renewal projects, this is significant. It effectively preserves accelerated tax deductions for qualifying improvements and developments for a further five years,” Schwellnus said.
Tighter offshore tax rules and relief for workers and property buyers
Schwellnus explained that the National Treasury has also tightened the rules around controlled foreign companies (CFCs).
Amendments to section 9D of the Income Tax Act specifically refine the so-called “high-tax exemption” test, including the threshold comparison and the treatment of foreign tax refunds paid to shareholders.
“For multinational groups, this is not merely drafting clean-up,” he said. It may materially affect whether foreign profits are imputed into South African taxable income by tightening calculation metrics for the high-tax exemption test.
Positively, the Treasury has also delivered more visible tax relief through certain threshold increases, Schwellnus said.
The Employment Tax Incentive thresholds have been increased, with the qualifying remuneration limit rising from R6,500 to R7,500.
The lower remuneration threshold is also being moved from R2,000 to R2,500. “This should provide welcome payroll relief for employers and further incentivise youth employment,” Schwellnus said.
Likewise, the transfer duty zero-rate threshold has increased from R1.1 million to R1.21 million, with all upper bands correspondingly increased. This is one of the most immediately tangible tax amendments for property buyers.
Overall, Schwellnus said the Treasury’s 2026 amendments are not dramatic but deliberate, with implications for consumers, employers, and investors.
“The VAT rate remains stable, key incentives have been extended, thresholds have been adjusted upward, and several technical income tax provisions have been sharpened,” he said.
“The danger for taxpayers lies in underestimating ‘technical’ amendments. In practice, these changes can materially affect tax outcomes, compliance systems, and planning positions.”
Schwellnus stressed that the safest path forward for taxpayers is simply to revisit tax positions now, before SARS does it for them.
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