South Africa’s Finance Minister Enoch Godongwana increased value-added tax (VAT) by 1 percentage point over two years in his 2025 budget — from 15% to 15.5% in 2025 and then to 16% in 2026. It was a controversial move. VAT is seen as a tax on the poor.
He had initially proposed a 2 percentage point VAT increase, which was rejected. The lower compromise amount is still unpopular.
‘Dropping the proposed VAT rate increase from 2% to 0.5% still hurts people and still hurts the economy,’ said Mervyn Abrahams of the Pietermaritzburg Economic Justice & Dignity Group, which monitors the household expenses of low-income families.
South Africa’s VAT rate is not particularly high in comparison with countries with economies of a similar size, the chart shows.
Although VAT is generally higher in richer European countries, there are a number of African countries with higher VAT rates that South Africa. For example, Rwanda, Uganda, Tanzania, Côte d’Ivoire and Senegal have VAT of 18%, according to PwC data. Nigeria’s is a relatively low 7.5%.
VAT contributes 25% to the South African government’s revenue, according to the National Treasury.

Get the data used in this chart on DataDesk