VAT Increases Are Coming to South Africa: Insights for 2026 and Beyond

As South Africa heads into the 2026 Budget Speech (25 February), VAT chatter is back. The standard rate remains 15%, and a change is not expected in the upcoming budget. But the bigger story is what comes next: pressure on the fiscus, a clear appetite for stronger VAT collections, and a move towards more automated compliance.

Understanding the likelihood of VAT rate increases

After a messy 2025 where proposed hikes were floated and then scrapped, most commentators expect the Treasury to avoid another immediate political fight in 2026. Still, VAT remains one of the most efficient revenue tools available, which is why analysts increasingly describe a future hike as a question of when, not if.

• The zero-rated food basket is unlikely to expand meaningfully without a broader policy shift, which keeps pressure on consumers dealing with high living costs.
• VAT is politically sensitive, but it is also relatively broad-based and dependable compared to other taxes.

Why this matters for businesses

If you're VAT-registered (or required to register), the absence of an immediate rate hike does not mean business as usual. The practical risk for vendors in 2026 is enforcement. SARS is ramping up verification, leaning harder on data matching, and showing less tolerance for sloppy documentation.

• More audits and verifications: Expect increased checks and faster follow-ups.
• Data-driven compliance: SARS continues to invest in analytics to flag inconsistent returns and invoice trails.
• E-invoicing momentum: Frameworks and legislation are moving toward real-time (or near-real-time) reporting.

For compliant businesses, that shift can be a good thing: fewer manual interventions, faster validations, and less room for fraud in the system. For everyone else, penalties and disruption become more likely.

Impact on consumers and the broader economy

Consumers likely won't see a VAT rate change in 2026. But VAT is still regressive, and future increases would hit lower-income households hardest unless offset through targeted relief.

The immediate policy direction looks clear: stabilise revenue by collecting more effectively rather than raising rates right now.

How to prepare now

1. Review VAT processes and keep returns up to date with strong supporting documents.
2. Assess whether your invoicing/accounting tools are ready for e-invoicing and tighter validation.
3. Watch for SARS updates around enforcement tools, e-invoicing frameworks, and post-budget guidance.
4. Get professional input if your VAT position is complex or you're exposed to audit risk.

If you need quick, SARS-aligned calculations at the current rate, our tools can help: Add VAT calculator and Exclude VAT calculator.