Preparing for the 2025 VAT Increase – A Guide for South African Businesses
The South African VAT rate is set to increase from 15% to 15.5% on 1 May 2025, and again to 16% on 1 April 2026. While the percentage change might seem modest, its practical impact on business systems, customer pricing, and compliance processes is anything but.
The Two-Phase VAT Hike: What’s Changing?
South Africa’s Treasury has introduced a phased VAT increase to help stabilise public finances. It’s a strategic move aimed at spreading out inflationary pressure and giving businesses time to adjust. But even gradual changes require precision planning.
Key Areas of Impact
- ERP & POS Updates: Businesses must recalibrate accounting systems, point-of-sale setups, and invoicing templates to reflect new VAT rates.
- Transitional VAT Rules: Understand when VAT is accounted for — e.g., if payment is made before the increase but goods are delivered after, the higher VAT may apply.
- Customer Communication: Unclear messaging around price changes could erode trust and invite reputational risk.
- Cash Flow Strain: With higher VAT collections (even as a pass-through), businesses will experience tighter liquidity between collection and SARS payments.
How Marwick & Company Helps
Our team provides:
- VAT transition roadmaps
- Custom system checklists
- Workshops on transitional VAT handling
- Client alerts and pricing communication templates
Conclusion
Preparing early is key to a smooth VAT transition. Marwick & Company ensures your business adapts confidently and compliantly — without disruption to operations or customer trust.