National Budget 2026 has introduced significant relief for small and medium-sized enterprises through a major increase in the VAT registration thresholds, with the compulsory threshold rising from ZAR 1 million to ZAR 2.3 million, and the voluntary registration threshold increasing from ZAR 50,000 to ZAR 120,000 both with effect from 1 April 2026.
With the first phase of carbon tax ending on 31 December 2025, the second phase commenced on 1 January 2026, accompanied by an increase in the carbon tax rate from R236 to R308 per tonne. Further adjustments follow on 1 April 2026 through higher carbon fuel levies. Key allowances, including the basic tax-free allowance and trade-exposure threshold are retained until 2030 while the carbon offset allowance has increased by 5%. These measures form part of South Africa’s long‑term carbon‑pricing trajectory under the environmental tax framework.
The Global Minimum Tax Act for the implementation by South Africa of the Pillar Two legislation was promulgated on 24 December 2024. The Act introduces two measures to effect the Pillar Two proposals, namely an Income Inclusion Rule (IIR) and a Domestic Minimum Top-Up Tax (DMTT) for Qualifying Multinationals for years of assessment commencing on or after 1 January 2024. The related Global Minimum Tax Administration Act, which outlines the requirements and procedures for submitting Global Anti-Base Erosion (GloBE) information returns, refunds, penalties and interest, etc., was promulgated on 9 January 2025. The South African Revenue Service (SARS) has rescheduled the launch of the GloBE registration and notification functionality on eFiling from December 2025 to 16 March 2026.
To encourage the production of electric vehicles in South Africa, the 2024 Taxation Laws Amendment Act (promulgated on 24 December 2024) provides for a deduction (150% of cost) by a motor vehicle manufacturer for qualifying assets brought into use from 1 March 2026 and before 1 March 2036 on production capacity for fully electric and hydrogen‐powered vehicles in South Africa.
The government is conducting a comprehensive review of all corporate tax incentives, with a view to further broaden the corporate income tax (CIT) base and to avoid complicated tax incentives that reduce progressivity by unfairly advantaging specific sectors or groups of taxpayers and hamper efficient administration of the tax system. Budget 2026 proposes revising special economic zone (SEZ) rules by replacing rigid transactional thresholds with a market‑value‑based test to ensure prices between SEZ companies and resident connected parties reflect arm’s-length values, ultimately preventing profit shifting while supporting legitimate investment activity. Government also seeks to consult during 2026 on retargeting the urban development zone (UDZ) incentive toward affordable housing in well‑located urban areas, with proposals expected for Budget 2027.
