By Monique Vanek
South Africa’s National Treasury unveiled a series of measures to boost revenue by 15 billion rand ($793 million) to alleviate immediate fiscal pressures and plans longer-term changes to the tax regime.
Personal income tax brackets and medical-tax credits won’t be adjusted to account for inflation, and that will provide the biggest boost to government coffers, according to the budget review, released in Cape Town on Wednesday. Excise duties on alcoholic drinks, tobacco products and electronic nicotine products will also be increased, as will levies on plastics bags and light bulbs.
A carbon fuel levy of 11 South African cents will be charged on every liter of gasoline sold and 14 cents on every liter of diesel, with effect from April 3. The Treasury has also proposed that a higher carbon tax rate of 640 rand per ton of carbon dioxide equivalent be charged on all greenhouse gas emissions that exceed the carbon budget from Jan. 1 of the year that a new Climate Change Bill comes into effect.
South Africa plans to implement global minimum corporate taxes, in line with an agreement signed by 135 countries. Top-up taxes will be imposed on profits reported by qualifying South African multinationals with annual revenue exceeding €750 million euros ($809 million) operating in other countries with effective tax rates below 15%, a minimum rate that will also apply to qualifying foreign firms operating within the country, the Treasury said.
A new retirement system that will allow savers early access to part of their pensions will come into effect Sept. 1. The so-called two-pot pension system will enable individuals to contribute one-third of their savings into an account they can access at any time, while the balance of their money will only become available at retirement.
Taxes levied on pre-retirement withdrawals are expected to raise 5 billion rand in the year through March 2025. Only one withdrawal will be permitted in each tax year, and a minimum of 2,000 rand can be accessed.
The Treasury also announced plans to introduce new incentives aimed at encouraging the production of electric vehicles in South Africa. A new allowance will become available from March 1, 2026, enabling producers to claim a deduction of 150% of their qualifying investment in production capacity for electric and hydrogen-powered vehicles in the first year — a concession that’s expected to cost 500 million rand in fiscal 2027.
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