South Africa

The most significant recent changes impacting the taxation of individuals in South Africa are as follows:

• The original Budget 2025 (March 2025) proposed to increase the VAT rate by 0.5% to 15.5% with effect from 1 May 2025 and a further 0.5% increase to 16% effective from 1 April 2026. To alleviate the burden of the increased tax on consumers, the basket of zero-rated essential food items was also proposed to be expanded. However, these proposals were subsequently reversed and withdrawn. Accordingly, the VAT rate will remain at 15% from 1 May 2025.
• From 1 March 2024, to the extent that a non-resident beneficiary has or obtains a vested right to the income received by / accrued to a South African resident trust, the trust will be treated as fiscally opaque, i.e. the trust (instead of the non-resident beneficiary) will be taxed on the income.
• The introduction of a two pot retirement system, announced in 2023, took effect from 1 September 2024. 
• From a tax administration perspective, effective from 1 December 2022, natural persons with one or more outstanding income tax returns will be subject to fixed non-compliance penalties.
• All individuals who are provisional taxpayers with assets above 50 million South African rand (ZAR) will be required to declare specified assets and liabilities at market values in the 2023 tax and subsequent year returns.