Cape Town: The Commissioner of the South African Revenue Service (SARS), Edward Kieswetter, has welcomed the agreement reached between various parties and the court order to suspend the planned 0.5 percentage point increase in value-added tax (VAT). The increase was initially scheduled to take effect on 1 May 2025.
According to South African Government News Agency, the agreement was made between the Minister of Finance and the main respondents in the case, the Democratic Alliance and the Economic Freedom Fighters (EFF). The Western Cape High Court ratified the agreement on 27 April 2025, settling the matter out of court.
SARS emphasized the importance of the court’s order, stating it provides clarity for the effective administration of the VAT Act. The suspension means there is no basis for VAT vendors to implement the previously announced increase, and they are urged to adjust their systems back to the current rate of 15%.
The revenue service also advised consumers to ensure they are charged the correct VAT rate of 15%. In cases where they are erroneously charged 15.5%, they should address the issue with the vendor to resolve it at the point of sale or through mutual agreement.
The Minister of Finance, Enoch Godongwana, has expressed his agreement with the court order, noting that it aligns with his prior decision on 23 April 2025 to suspend the VAT increase. National Treasury highlighted that the Minister had already announced the withdrawal of the increase, negating the need to continue with legal proceedings. The context of the suspension was detailed in an affidavit filed by the Minister in response to a supplementary affidavit from the Democratic Alliance.