Freedom Day 2025 – official freedom from pending VAT increase

The Western Cape High Court suspended the 0.5 percentage point VAT increase that was due to take effect from Thursday, 1 May.

“The resolutions of the National Assembly and the National Council of Provinces, adopted on 2 April 2025, to accept the report of the Standing Committee on Finance and the Select Committee on Finance, on the 2025 Fiscal Framework are set aside,” the ruling  which was suspended on Sunday 27 April, states.

Finance minister, Enoch Godongwana, has been ordered to pay 50% of the Democratic Alliance and the Economic Freedom Fighters costs, while the speaker of the National Assembly and the chairperson of the National Council of Provinces are to pay the other 50% of the DA and EFF court costs.

SARS Commissioner Edward Kieswetter, welcomed the news, noting,
“This is an important order that provides clarity to SARS to effectively and efficiently administer the VAT Act. It also has practical implications for consumers and VAT vendors charged with managing VAT.”

The implications for consumers and VAT vendors are:

• The court’s order suspends the 0.5 percentage point increase that was originally announced to come into effect on 1 May 2025 and there is, therefore, no basis for VAT vendors to implement an increase of VAT rate.


• All vendors are urged to readjust their systems back to 15%.


• All consumers are urged to ensure that they are charged the correct VAT rate of 15%. In the unlikely event they are charged 15.5%, consumers should bring this to the attention of the vendor and ensure that this is resolved at the point of sale or otherwise by mutual agreement.

On Friday, 25 April, Kieswetter had issued guidelines allowing VAT vendors a grace period until 15 May to get their systems in order.

Read more: Sars: How to deal with the VAT-on, VAT-off as a business

The grace period is likely to fall away. However, some providers such as Discovery Gap Cover have issued notices to clients stating: "Any VAT-related increase you may experience in May 2025 will be adjusted and reflect in your June 2025 bill."

Evádne  Bronkhorst, senior manager – Tax Consulting at Forvis Mazars in South Africa cautioned that rolling back the already-implemented VAT changes will place a heavy administrative burden on small businesses. “Many had already adjusted their systems and pricing and will now need to reverse those changes,” she said.

Read more: VAT debacle shines a light on a fragile coalition – and R75bn question remains

The Finance Ministry clarified that Godongwana, the DA and the EFF had agreed to have the matter settled out of court, and the Western Cape High Court subsequently ratified the agreement on 27 April 2025. “Minister Godongwana welcomes the court order, as it is entirely consistent with his announcement on Wednesday, 23 April 2025 to suspend the VAT increase. Having already announced the withdrawal, the Minister felt that he would no longer have cause to continue with the court case,” the Finance Ministry said in a media statement.

The media statement further noted:

“For the benefit of the broader public and in the interests of setting the record straight, the Minister wishes to highlight the most salient points covered in the responding affidavit, which are as follows:

• Following the Speaker's letter of 21 April 2025, it became clear the VAT increase lacked the necessary political support. The Ministry subsequently announced plans to introduce legislation maintaining VAT at 15% from 1 May 2025.


• While proposed reluctantly, the VAT increase was considered less detrimental to economic growth and employment than alternatives examined by National Treasury.


• The withdrawal creates a medium-term revenue shortfall of approximately R75-billion, necessitating decreased government expenditure with likely impacts on service delivery.

The Minister welcomes the clarity and certainty provided by the court order. Equally, he remains committed to fiscal responsibility and will pursue alternative measures to ensure sustainable public finances.”

DA federal council chairperson, Helen Zille, said the ruling showed that government decisions cannot be made without proper oversight. “It also gives South Africans certainty that changes affecting their pockets will not happen without the necessary checks and balances in place,” she said. DM