VAT Increase Reversal: What This Means for the Industry

The National Treasury has confirmed that the proposed VAT increase, scheduled to take effect on 1 May 2025, has officially been withdrawn. The VAT rate will remain at 15% until further notice — welcome news for many in the tourism sector.

This announcement follows a period of growing public, legal, and parliamentary concern regarding the potential economic impact of the increase. The government had initially proposed a phased hike in VAT — 15.5% in 2025 and 16% in 2026 — as part of broader fiscal consolidation efforts. However, following recent consultations and feedback, Treasury has opted to reassess its approach.

According to the media statement issued on 23 April, revised budget legislation will now be tabled to accommodate the R75 billion shortfall over the medium term.

You can access the full statement here.  

Implications for the Tourism Sector

For tourism businesses — the reversal provides some much-needed certainty. We recommend that members:

• Review any pricing or invoicing changes made in anticipation of the increase;
• Engage with your tax practitioner to ensure compliance and correct reporting;
• Communicate clearly with your clients and partners that VAT will remain at 15%;
• Monitor updates from SARS and our channels for further developments.

If your business had already begun implementing changes in response to the proposed increase, now is the time to revisit those adjustments.

If you have any questions, or if your business would like to consult directly with BDO, our tax advisory partner, you can submit a query via their contact form here.