South Africans will be keeping a close eye on Minister of Finance, Enoch Godongwana’s Budget Speech on Wednesday with a keen interest on tax adjustments in the country.
Tax adjustments will impact businesses and consumers alike and citizens always pay close attention to the popular ‘Sin Taxes’.
Joubert Botha, executive director: head of tax and legal at KPMG told Business Report that 2025 May well be a year of tax consolidation with consequential adjustments and not major announcements or proposals, especially taking into account global minimum tax and two pot retirement system.
Botha further said that there will very likely be a large focus on AI and the opportunity for such technology to improve tax collection, management and disputes.
Botha said, “From an expense and cost perspective we predict more funds to SARS which will likely be used to continue with the compliance and collection drive and tax modernisations plan and project, particularly the development and use of AI and technology solutions to collect and analyse data. We don’t foresee any major change in the VAT rate however, are likely to see more products added to the zero percent list.”
He said that corporate tax may see adjustments around exemptions, allowances and incentives.
Furthermore, Botha said there will be a focus on maintaining the tax base.
“Government will continue to focus on this and implement amendments and adjustments to address tax loopholes and transactions that erode the base,” he said.
“On personal tax, we are going to see more clarity on the use of medical aid tax credits and the future thereof. There may also be a cap or reduction in medical aid tax credits. On the wealth tax, we are expecting announcements and perhaps even disclosure documents around a future wealth tax. International tax, legislative adjustments are likely, to take into account the new global minimum tax,” Botha said.
International Trade and Customs
International trade will be another hot topic that will be watched with a close eye given US President, Donald Trump’s recent comments around tariffs and the cutting of USAID.
Venter Labuschagne, Partner and Solution Leader for South Africa’s International Trade and customs practices at KPMG South Africa, said, “Uppermost in everyone’s minds, is the current trade policy that has been launched by the US on the back of President Trump's comments, and the fact that South Africa might be losing benefits under the African Growth and Opportunities Act (AGOA). The US is, of course, one of South Africa's major trading partners, and particularly, the motor, chemical and agricultural industries will suffer on the back of increased tariffs and the potential loss of AGOA benefits.”
Labuschagne said he is expecting the minister to share some insights into the strategy that the government will follow in dealing with these potential threats and provide some guidance to business on what they can expect should the benefits fall away and what support could be expected from government.
“As far as domestic customs and excise duties are concerned, we are of course expecting the normal increases in sin taxes on cigarettes and tobacco. There’s also talk of expansion of the health promotion levy or so-called sugar tax to also include fruit juices which are currently excluded from the tax and then of course, increases in the road accident fund and fuel levy would also be expected. From a purely fiscal perspective, we are expecting government to relook the ad valorem customs and excise duties on luxury goods such as cell phones and perhaps creating different classes of products to attract different duties,” Labuschagne told Business Report.
“Lastly, we are also expecting guidance from government on its policies towards electric vehicles and how the tax net can be used in order to support and promote electric vehicle manufacturing in South Africa,” he further added.
BUSINESS REPORT